Top Bank 50 Reflects COVID-19 Impact

by By Rita E. Garwood

The impact of the COVID-19 pandemic is evident in this year’s Monitor Top Bank 50 ranking, with banks reporting a net portfolio decline of 2.1% and new business volume 13.9% below 2019 levels.

Monitor’s Top Bank 50 experienced a net portfolio decline of 2.1% in 2020, reporting $277.5 billion in net assets, down from $283.6 billion in 2019. The net decline of 13.9% in originations was much more significant, demonstrating the impact of the COVID-19 pandemic on the banks, which reported $88.2 billion in new business volume, down from $102.5 billion in 2019.

Despite the rocky year that was 2020, each of the top five retained their positions in the asset ranking. Bank of America Global Leasing held on to its top position with $56.9 billion in net assets. Despite a 13.1% drop in portfolio size, Wells Fargo Equipment Finance managed to retain its No. 2 position in the asset ranking, although the space between the leader and runner-up has widened dramatically.

In the volume ranking, the top three — Bank of America, Wells Fargo and PNC Equipment Finance — held on to their previous year positions, while U.S. Bank Equipment Finance, coming in at No. 4 with $4,716.4 million in originations, and Key Equipment Finance, weighing in at No. 5 with $4,430.7 million in new business volume, traded places.

U.S. Bank Overview

Although the 2020 numbers paint a rather dismal picture for banks, the Q2/21 FDIC Quarterly Banking Profile shows banks recovered quickly in 2021. Net income for FDIC insured banks came in at $70.4 billion, up $51.9 billion (281%) on a year-over-year basis. The FDIC noted this increase was, in part, driven by a $73 billion decline in provision expense. Overall, 66.4% of banks reported year-over-year increases in quarterly net income in Q2/21.

During the same quarter, the average net interest margin contracted 31 basis points from the previous year’s levels, reaching 2.5% and marking the lowest level ever recorded. Aggregate net interest income was down $2.2 billion (1.7%) year-over-year. According to the FDIC, the largest banks drove the drop in net interest income, while 64.1% of all banks reported higher net interest income year-over-year.

Loan and lease balances grew $33.2 billion (0.3%) from Q1/21 to Q2/21, driven by credit card and auto loan balances, marking the first quarterly increase in loan balances recorded since Q2/20. Year-over-year loan balances were down $133.9 billion (1.2%) due to a decrease in C&I loans, which dropped $360.4 billion (13.4%) year over year.

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Top Bank 50 – Rankings

Monitor’s Top Bank 50 reported nearly $277.6 billion in net assets in 2020, down $6 billion (2.1%) from $283.6 billion in 2019. Of the group, 31 banks reported combined portfolio growth of $8.2 billion, while 19 experienced a combined decline of nearly $14.3 billion. Huntington Asset Finance reported a gain of $1.3 billion in net assets, the largest reported by the group. CIT Bank also reported a notable year-over-year gain of $848.8 million.

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The Top Five 

Bank of America, ranked No. 1, reported a slight drop (2.7%) in its portfolio, with year-end 2020 net assets of $56.9 billion. Wells Fargo, ranked No. 2, recorded a more significant portfolio drop of 13.1%, ending the year with net assets of nearly $38.9 billion. PNC, ranked No. 3, experienced a decline of 1.8% in net assets, bringing its total to $16.4 billion for the year. No. 4-ranked CIT and No. 5-ranked Key Equipment Finance expanded their portfolios. CIT ended 2020 with $16.2 billion in net assets, up 5.5% year over year, and Key Equipment Finance reported nearly $15.2 billion in net assets, a 0.9% year-over-year gain.

Arrivals & Departures

Four new entrants joined the Bank 50 ranking this year. Coming in at No. 28 was First Horizon Bank Equipment Finance with $1.4 billion in net assets and $760.7 million in new business volume. Raymond James Equipment Finance, ranked No. 48, joined the group with a portfolio of $371.8 million and originations of $173.7 million. Atlantic Union Equipment Finance made its debut at No. 49 with $328.6 million in net assets and $340.3 million in new business volume. Finally, HomeTrust Bank entered the ranking at No. 50 with a portfolio of $307.3 million and $163.4 million in new business volume.

A Brighter 2021 

Of Monitor’s Top Bank 50 group, 36 banks provided a net asset forecast for 2021, with 32 companies predicting an increase in portfolio size and four expecting net assets to shrink. Calculated on an average weighted basis, the collective year-end 2021 forecast for the group was a net gain of 3.2%, which would bring the 2021 Bank 50 portfolio to $286.5 billion.

Looking ahead to year-end 2021 originations, 38 banks provided a forecast, with 36 anticipating an increase in new business volume and two predicting a decline. Calculated on an average weighted basis, the group estimated a 12.8% increase in year-end new business volume, which would bring year-end 2021 Monitor Top Bank 50 originations to $225.2 billion.

When it came to hiring, 38 banks provided a forecast, with 29 expecting to increase their staff, three anticipating decreases and six predicting no change to their total ranks. Overall, the group expected to increase staffing levels by 4.2% by year-end 2021.

Monitor thanks all the participants and their staff members who provide us with the survey data we rely upon to produce this report. As always, we welcome your feedback and commentary. •

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