Bad loans hit more than just the bottom line last year — they slashed the market capitalization of several of the largest U.S. banking companies.

Bank of America Corp.’s slipped to fourth largest at the end of last year, down 12%, to $75.3 billion, according to American Banker’s data. The decline came in the second half of the year and particularly in December, after the Charlotte, N.C., company warned of lower-than-expected fourth-quarter profits due to problem loans. On Dec. 6 alone — the day of the warning — Bank of America shed $8 billion of market cap. Its market cap continued to get a beating in January. Investors dumped Bank of America shares on Friday even though the company denied rumors that it had suffered huge losses from derivatives trades. (See story, back page.)

Among other companies with steadily rising nonperforming assets was SunTrust Banks Inc. of Atlanta, which dropped to 15th from 10th; its market cap fell 15%, to $18.6 billion.

Wachovia Corp.’s market cap slid 14.2%, to $11.8 billion, dropping it to 20th place from 17th in 1999.

Meanwhile, companies that avoided loan problems have risen in the rankings. Wells Fargo & Co. in San Francisco jumped 43% last year, taking second place with a market cap of $95 billion. Bank of New York Co. jumped 38.7%, to a market cap of $40 billion. It was sixth among the top 100 banking companies, up from eighth in 1999. Citigroup Inc. retained its first-place ranking, with a market cap of $229.3 billion, an increase of 22%.

Analysts said that though market cap is not useful as a tool to compare companies in most ways, it can help show some companies as more flexible to pursue growth strategies.

Banks with gains in market capital are more likely to have an easier time putting together deals, said Jennifer Thompson, an analyst with Putnam Lovell Securities. “It gives them flexibility to expand via acquisitions,” she said. “When you have a larger market cap, acquisitions don’t impact the business.”

Bank One Corp.’s market cap rose 15%, to $42.3 billion, putting it in fifth place, up from sixth in 1999. Mellon Financial Corp., Firstar Corp., and U.S. Bancorp also posted gains last year. Mellon rose 38%, to $24 billion in market cap, putting it at 10th. Firstar rose 6.6%, to $22 billion, to 11th place. Its merger partner, U.S. Bancorp, rose 26.6%, to $21.9 billion, putting it at 12th.

Smaller regional banks had the biggest gains last year. Banknorth Group Inc.’s market cap rose 362%, to $2.8 billion. National Commerce Bancorp’s rose 104%, to $5 billion; Commerce Bancorp’s rose 89%, to $2.1 billion; and North Fork Bancorp’s 88%, to $4.2 billion.

KeyCorp had a 20% increase in market cap, to $11.9 billion. Denis Laplante, an analyst at Fox-Pitt Kelton who follows the bank, said a corporate restructuring is behind KeyCorp’s increase. “It reflects a late year-end rally,” Mr. Laplante said. “The market is betting the worst of the setbacks is behind them.”

Ted Willi, an analyst with AG Edwards, said he does not put much faith in rankings based on market cap. “The only thing a bank should worry about is the price of its shares,” he said. “Growth in market cap doesn’t 100% correlate with share prices.”

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