Led by a trio from the Mid-west, the nation's largest bank companies turned in their fifth consecutive quarter of improved returns on assets and equity in the first three months of the year, according to the American Banker's quarterly roundup of performance ratios.

Ohio's Fifth Third Bancorp, a perennial front-runner in the rankings, nabbed first place among the nation's 59 largest banking companies in terms of return on average assets, with a stunning 1.74%. The Cincinnati-based company also took ROA honors in the first quarter of 1992 with a 1.65% ratio.

Two in-state neighbors - Columbus-based Banc One Corp. and Cleveland's Society Corp. - ranked third and fifth. Another Midwest company, Wisconsin's Firstar Corp., placed second with an ROA in the first quarter of 1.59%.

Morgan Tops in ROE

Return on common equity honors went to New York's J.P. Morgan & Co., which edged out Bankers Trust New York Corp. - last year's first-quarter ROE titlist - with a return of 24.94%.

Bankers Trust, which like Morgan turned in handsome trading profits, handed shareholders a 24.28% return on common equity.

For the first time since this paper has been calculating peer-group performance ratios (see tables on pages 10 and 11 for full data), the groups are being categorized purely by asset size.

All companies with more than $70 billion of assets at March 31, 1993, are considered "mega-banks." Those with assets between $20 billion and $70 billion are grouped as "superregionals," and companies with assets between $10 billion and $20 billion are considered "large regionals."

|Money Center' Discontinued

The previous category of "money center" banks -- whose members were chosen based on a combination of funding methods, business mix, and asset size - was deemed anachronistic.

Some of the nation's biggest banks have refocused on local markets as they dig out from their problems, while some large superregionals have kept local characteristics while joining the top banking ranks in asset size.

As a result, NationsBank Corp., Banc One, and other acquisitive powerhouses have jumped from the superregional category to the new megabank group -- flanked by traditional money-centers such as Citicorp, Morgan, and Bankers Trust.

Similarly, some companies that have shrunk drastically in recent years -- such as Continental Bank Corp.--are now categorized as superregionals.

The performance data for the first quarter, as recalculated to exclude one-time accounting changes, suggest not only that the Midwest is economically robust but also that many superregional companies are reaping benefits from in-market mergers, said Edward Furash, whose Furash & Co. is a bank consultancy in Washington, D.C.

"There has been an enormous emphasis on cost efficiency at these banks," Mr. Furash said.

Society, for example, showed one of the strongest rebounds among its peers, climbing to fourth place among 28 superregionals in terms of ROA and ROE. In the previous year's first quarter, the $26 billion-asset company ranked toward the bottom of its class.

Merrill Lynch & Co. analysts said Society's performance reflects the "successful completion" of its merger with neighboring Ameritrust Corp. "Costs were down, fees inched up, and credit quality [was] almost back to historical levels," Merrill wrote in a recent report.

Moreover, it added, Society is experiencing that most unusual of events -- "additional signs of loan growth."

Among Supperregionals

Among all 28 superregionals, the mean return on assets before accounting changes rose to 1.13% in the first quarter from 0.93% one year earlier. Their mean return on average equity jumped to 15.64% from 13.81% in the first quarter of 1992.

Twenty-one of the 28 superregional banks had ROAs higher than the 1% benchmark of strength, compared with 14 a year ago. Nineteen of the 28 had returns on equity surpassing the 15% mark that most banks strive for, up from 13 in the same period in 1992.

Nevertheless, performance ratios improved across the board for all three peer group categories.

The seven megabanks registered a mean ROA before accounting changes of 0.93%, up slightly from 0.91% in the year-earlier quarter. The mean was pulled down by Citicorp and Chase Manhattan Corp., which had ROAs of 0.67% and 0.61%, respectively.

The average ROE for the mega banks was 16.93%, up from 15.81%. The mean nonperforming asset ratio fell to 2.77% from 3.39%.

Among the 23 "large regionals" in the survey, the mean return on assets was 0.93%, up from 0.78% in the same period 1992. The mean ROE for the group was 13.00, up from 10.91.

|Gift' from the Fed

"The banks have been given a gift by the Federal Reserve in the form of low interest rates," Mr. Furash said. "But some of the structural problems that have dogged the industry have not gone away." As a result, he said, banks should deploy their robust earnings "to reposition themselves for a broader financial services industry."

Indeed, banks that have aggressively entered new areas are among the industry's top performers.

Morgan and Bankers Trust are now well established as investment banking and trading powerhouses. Fifth Third relies heavily on a fee-based transaction processing business for its revenues.

Morgan reported trading revenues of $469 million in the first quarter, up from $164 million in first quarter of 1992. Its ROA jumped to 1.32% from 1.05% in the year-earlier first quarter.

Bankers Trust saw its trading revenues climb to $346 million in the quarter from $216 million one year earlier.

Its ROA before accounting changes soared to 1.18% from 1.02% in the first period of 1992.

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