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Identifying the best — and the worst — banks

Mar.31, 2008 in Market Outlook

PALM BEACH GARDENS, Fla. (MarketWatch) — How to find the best bank for personal
business? The worst? Much depends on what you seek. Companies that rate bank
satisfaction often limit rankings to one or more types of services. Plus,
institutions included in surveys may be limited.

To find the worst FDIC-insured institutions, we first sought federal complaint
information. But complaints are tracked by four different federal agencies –
each with different disclosure rules. Different affiliates of an institution may
have different regulators. And mergers and charter changes skew data.

The Office of Thrift Supervision declined to provide the 10 institutions under
its jurisdiction with the largest number of complaints in 2007.

Generally the institutions with the largest customer bases attracted the most
complaints, OTS spokesman William Ruberry says. The FDIC provided a list of 10
outfits with the most complaints under its jurisdiction in 2007, in alphabetical
order. But it declined to provide a ranking in terms of complaints or actual
numbers by named institution.

The Fed said our request would require tons of work, so it required a written
request, under the Freedom of Information Act. But Fed spokeswoman Susan Stawick
warned it was unfair to list financial institution complaint information by
agency due to the wide disparity over the number of institutions each oversees.

The Fed, she indicates, regulates about one-sixth the number of institutions
overseen by the FDIC and less than one-half the number under Office of the
Comptroller of the Currency jurisdiction.

Only the Office of the Comptroller of the Currency, which regulates national
banks –including the largest credit card issuers — gave us data on the
institutions with the largest number of complaints:

10 national banks with largest number of complaints in 2007

Source: Office of the Comptroller of the Currency

FDIC-regulated institutions with the largest number of complaints
(alphabetically) in 2007

Source: FDIC

Consumer satisfaction

In the market for a checking account, savings account or small personal loan? The
University of Michigan’s American Customer Satisfaction Index, tracking bank
customer satisfaction since 1994, ranks Wachovia Corp. (WB) tops. But the ACSI
only measures five large banks — a number sliced nearly in half over time due to
mergers.

David Van Amburg, ACSI’s managing director, says bank customer satisfaction
dropped to its low point in 1999, and since has been climbing. He attributes the
upswing to fewer bank mergers and the fact that banks, when they do merge, handle
customers better.

You wouldn’t know that by looking at banks selected for the Malcolm Baldridge
National Quality Award, given by the U.S. president to businesses.

The last bank to get the coveted award, in 2000, was Los Alamos National Bank in
New Mexico. The award is based on leadership; strategic planning; customer and
market focus; measurement, analysis and knowledge management; human resource
focus; process management and results.

Best in overall satisfaction with credit cards, J.D. Power and Associates
reported last October: American Express. (AXP) The study is based on responses
from 7,812 credit-card users. Highest retail banking satisfaction, J.D. Powers
reported last June, goes to Commerce Bancorp (CBH) in the Mid-Atlantic region;
Washington Mutual (WM) in the Midwest and West/Pacific region; Bank of America
(BAC) in the Southeast; and Woodforest National Bank, Houston, in the Southwest.
The poll, based on responses from 20,898 households, examined transactions,
product offerings, account statements, convenience, fees and problem resolution.

Worried about identity theft?

Javelin Strategy & Research, Pleasanton, Calif., in November 2007, shows Bank of
America scores tops on identity-theft prevention, detection and resolution.
Javelin uses phone-based mystery shopper investigations and reviews Web sites
from 25 selected institutions.

Ironically, Chris Jay Hoofnagle, who analyzed Federal Trade Commission complaint
data on identity theft, also ranks Bank of America highest in the total number of
events. Of course, Bank of America is the nation’s largest bank, so it’s natural
it would have more complaints. Hoofnagle, in his Feb. 26 report, tracked monthly
Federal Trade Commission complaint data in January, March and September 2006.

Following Sprint and AT&T, J.P. Morgan Chase, (JPM) he says, is the next bank
with the largest number of identity-theft complaints. Next: Capital One (COF) and
Citibank, (C) which, you might recall, touted its helpfulness to identity theft
victims on network television.

Spouses Gail Liberman and Alan Lavine are syndicated columnists. Their latest
book is “Quick Steps to Financial Stability” (Que/Penguin). You can contact them
at www.moneycouple.com Click for Detail

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