MOST READ: Best Banks Not Best Buys

Here are the ten publicly traded bank holding companies with over $10 billion in total assets with the highest return on equity for the first three quarters of 2008:

Large Publicly Traded Bank Holding Companies Year-to-Date, 9/30/08

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Source: Highline Financial, Inc.

Here are some summary asset quality and capital adequacy ratios for the group:

Asset Quality and Reserve Coverage

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Source: Highline Financial, Inc.

Not surprisingly, the list is dominated by holding companies that maintained strong loan quality or have a business model focused on fee income, like State Street (STT Quote) (with loans comprising less than 1% of total assets) and Northern Trust (NTRS Quote) (with loans up 30% of assets). Of course, these two have faced other problems during 2008, as we'll see below.

Finally, here's a look at how these companies' common shares have performed year-to-date, vs. their respective indices. The companies are grouped by index, sorted by declining year-to-data total return, assuming dividends are reinvested:

Market Performance Through 11/24/08 Close

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Source: Bloomberg

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The holding company with the best asset quality also had the worst year-to-date total return on common shares through Nov. 24, with State Street shares returning a negative 55%. While the company (virtually a non-lender) didn't face loan quality problems and had experienced no defaults on securities, there was no hiding from the overall financial crisis and the incredible decline of the market value of asset-backed securities.

State Street held up nicely through the first half of September, when fears about unrealized losses on securities held on the company's balance sheet and potential losses in money market funds managed by the company caused shares to plunge. Looking at State Street's regulatory filing with the Federal Reserve, these unrealized losses increased to $3.2 billion as of Sept. 30, from $2 billion in June. The company said in its third-quarter Securities and Exchange Commission filing that $2.09 billion in unrealized losses related to asset-backed securities, with $801 million collateralized by subprime mortgages and roughly $653 million collateralized by student loans."