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Bank of America Is Still the Biggest Loser

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It's not unusual for Bank of America (NYSE: BAC  ) to perform miserably on any given survey or ranking. Whether it is being graded on its reputation, its customer service, or how it performs in the mortgage arena, the big bank usually gets a double thumbs-down, often coming in dead last.

That's bad enough when you're gauging people's attitudes -- which is important -- but a lousy score on a measure of profitability is worse still. Unfortunately, a recent assessment of the banking industry rated B of A as the worst performing of the nation's largest financial institutions.

Lowest indicators on nearly every metric
A new evaluation by Bank Director magazine scores banks on five criteria, breaking up institutions by size. The 2013 Bank Performance Scorecard looked at each bank's core return on average assets and core return on average equity to determine profitability, and established capital strength using a ratio of tangible common equity to tangible assets. Asset quality was determined by comparing the net charge-offs to average loans, as well as nonperforming assets to all loans, and real estate owned.

In the "$50 Billion and Above" category, Bank of America was compared to 18 other banks and came in at position No. 19. While the magazine acknowledged that the first three criteria were weighted more heavily than the two measurements of asset quality, it was also noted that the best-performing banks generally did well in every category.

While Bank of America did poorly across all categories, it came out looking especially feeble in the performance department, sporting a return on average assets, or ROAA, value of 0.22%, and a return on average equity, or ROAE, of slightly more than 2%. For comparison, Wells Fargo (NYSE: WFC  ) , which ranked No. 5, showed ratios of 1.47% on the first, and 13.17% on the second metric.

Big regionals took the top spots
Regionals smoked the bigger banks, and the top spot went to Huntington Bancshares (NASDAQ: HBAN  ) , followed by M&T Bank (NYSE: MTB  ) . Both of these institutions have put a lot of work into becoming more robust over the past few years. Huntington, for example, has made an amazing recovery from the dark days of the financial crisis, while M&T has been busy expanding its footprint, most recently by its planned acquisition of Hudson City Bancorp (UNKNOWN: HCBK.DL  ) .

Lest you think that Bank Director may have been especially harsh with B of A, Forbes' 2012 listing of America's Best and Worst Banks also gave the big guy a pretty pitiful score, ranking it at 86 out of 100 -- with a ROAE of 2.3%.

Bank of America still has a lot of work to do
The bank has made some great strides since CEO Brian Moynihan has been at the helm, but it's obvious that much still needs to be done. Moynihan's ministrations have had some positive effects, to be sure -- the bank's capital ratios have practically come back from the dead -- but issues such as improving mortgage lending and customer service seem stuck in neutral. Profitability, obviously, is an even bigger problem.

As long as the bank continues to struggle with stagnant profits and nagging legal problems, investors will bide their time, waiting until some real progress is made before putting their faith in the big bank again. At the current rate of improvement, that day could be a long time coming.

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Read/Post Comments (3) | Recommend This Article (5)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 18, 2013, at 9:51 AM, katies010 wrote:

    No, those of us who had a mortgage thru BofA and were screwed by them are the biggest losers. I truly hope they get what they deserve.

  • Report this Comment On August 18, 2013, at 11:16 AM, sabebrush6 wrote:

    Dump BOA & go to a credit union. They treat you like they want you to stay long term. Not just a bank acct. with money & screw you if you don't have enough. BOA treats you like they are doing you a favor by letting you do your banking there.

    At a credit union, you are part of it. NON of those nasty little fee's - hidden and not so hidden.

  • Report this Comment On August 18, 2013, at 2:40 PM, helltrent wrote:

    B of A is a criminal organization that stole about 75 grand from my family. All of which is unprovable because they ripped off my aged aunt right before she died. She bought an annuity from them and they never furnished her with a copy of the document she signed. When our lawyer requested a copy THREE TIMES, he was ignored. All of our pleas went ignored. Because B of A knew it would cost us more than the 75K to recover it. And that's what our lawyer said. He told us to give up. B of A used to be a great institution years ago, but it has devolved into a pit of thievery, greed and depravity. I wish our government had the balls to put the bastards in jail. But as it's turning out, B of A has effectively destroyed itself. You can't keep ripping people off and expect to stay in business. There really is a rule of Karma. It just takes a while sometimes. And I for one, will be celebrating its demise.

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