A weak economy is contributing to a rising number of nonperforming loans within the banking industry.
Nationwide, total nonperforming loans grew by 7.3 percent for first quarter 2001, according to Weiss Ratings, a Florida-based bank rating company.
That has led to 47 percent of all banks reporting increases in charge-offs, loans that have proven uncollectible and are written off.
Charge-offs increased $7.4 billion during first quarter 2001, representing a 38 percent increase over the $5.4 billion in charge-offs for first quarter 2000. Second quarter results have not yet been released.
Banks showing the largest year-over increase in net charge-offs included:
Bank of America, Charlotte, N.C.
Firstar Bank, Cincinnati, Ohio
Bank One, Chicago, Ill.
U.S. Bank, Minneapolis, Minn.
The leap in charge-offs is expected to continue to grow, especially in the commercial sector.
"With nonperforming loans continuing to grow, we expect charge-offs to accelerate well into 2002," said Martin Weiss, chairman of Weiss Ratings, in a news release.
In Utah, Bank of American Fork, Brighton Bank, Far West Bank, Associates Capital Bank and Barnes Banking were rated among the strongest banks and thrifts in terms of nonperforming loans to capital — all rated as "excellent."
The state's weakest banks and thrifts included First Utah Bank, Merrick Bank, Cache Valley Bank and Home Credit Bank — each given a "weak" rating by Weiss in terms of nonperforming loans to capital.
The banking industry holds nearly $53 billion in nonperforming loans, accounting for 8.3 percent of the industry's total capital and reserves, the highest level in six years.