Bank of America Corp. lost its ranking as the largest U.S. lender by assets as Chief Executive Officer Brian T. Moynihan cut jobs and sold units and rival JPMorgan Chase & Co. expanded.
JPMorgan’s total assets increased 1.9 percent in the third quarter to $2.29 trillion as of Sept. 30, while Bank of America reported Tuesday a 1.8 percent decrease to $2.22 trillion. San Francisco-based Wells Fargo & Co. was the largest by market value as of Monday’s close on the New York Stock Exchange.
Bank of America became biggest by assets under former CEO Kenneth D. Lewis through acquisitions, including credit-card issuer MBNA Corp. and home lender Countrywide Financial Corp. Both were the largest in their industries and later triggered writedowns that contributed to six quarterly losses since mid-2008 at Charlotte, North Carolina-based Bank of America.
The change in ranking “tells me that Bank of America is behind JPMorgan,” said Jefferson Harralson, an analyst at KBW Inc. “Their capital levels are 200 to 300 basis points behind JPMorgan; their ability to pay a dividend is 8 to 12 quarters behind. The acquisition of Countrywide was a key determinant of why they’re so far behind.”
Moynihan has been shutting branches and selling assets such as Canadian credit-card operations and a stake in health-care company HCA Holdings Inc. as the bank prepares for capital rules set by the Basel Committee on Banking Supervision. He said last month he would eliminate about 30,000 jobs after consumer-protection rules squeezed revenue from debit and credit cards.
“We don’t have to be the biggest company out there,” Moynihan said at a Sept. 12 investor conference in New York. “We can get out of things we don’t need to do, make the company leaner, more straightforward, more driven.”
JPMorgan, led by CEO Jamie Dimon, never reported a losing quarter throughout the financial crisis, even as it rescued Bear Stearns Cos. and took over the banking unit of Washington Mutual Inc. after that Seattle-based lender collapsed. Dimon added units to the commodities business and has been increasing the branch count.
JPMorgan raised its dividend in March to 25 cents a share from 5 cents after the Federal Reserve reviewed the ability of the largest U.S. lenders to withstand another economic slump. Bank of America said that month that the Fed rejected its request to increase its dividend from 1 cent a share.
JPMorgan’s third-quarter net income was $4.26 billion, the New York-based company reported last week. Moynihan’s firm posted third-quarter net income of $6.23 billion helped by an accounting gain, the bank said today.
Bank of America became the largest bank in the first quarter of 2009. JPMorgan had supplanted New York-based Citigroup Inc. as the biggest U.S. bank in 2008 after taking over Bear Stearns.
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