Banking's Top Performers 2013, Part II: Abridged Version

June 28, 2013 at 3:24 PM

The U.S. economic expansion gained a firmer footing in 2012 and the performance of Mid-sized banks in 2012 reflected the uptick in economic growth. Problem loan levels continued to recede. A continuation of near record residential mortgage refinance activity as well as an upturn in residential purchase activity helped many midsized banks to record robust revenue from residential mortgage originations and solid growth in their loan portfolios. The latter, attained both organically and via acquisitions, enabled the Mid-sized banks to grow their net interest income despite generally lower yields on earning assets. A few expamples:

Strategy 1: Residential Mortgages 
The residential mortgage business in 2012 was central to the profitability of the top performing banks. HomeStreet, Inc., of Seattle, Wash., (No. 1) is a textbook example. It reported record net income for the year. Eighty percent of the bank’s total revenue came from noninterest income, primarily mortgage origination and sales fees. 

Strategy 2: Organic Growth in Loans 
In the Northeast, Canandaigua National Corp, Canandaigua, N.Y. (#19) grew loans organically by 12.9% last year, led by double digit growth in its indirect automobile portfolio. That growth followed a strategic decision that the bank made in 2011: to increase originations of short- to medium-term duration, higher yielding loans to replace low yielding investments. It also capitalized on customer dislocation from the sale of 125 branches.

Strategy 3: Acquisitions 
Acquisitions played a significant role in several top performers’ performance. Great Southern Bancorp, Springfield, MO. (No. 17), pursued an expansion strategy via FDIC-assisted acquisitions for several years. Since 2009, the company has consummated four FDIC-assisted transactions. It’s loan and deposit portfolios have become more diversified, and it significantly expanded its geographic footprint by adding operations in Iowa, Kansas, Minnesota and Nebraska. Privately and foreign owned Average ROAE among the top ten private, subchapter S banks was 27.25%. Average ROAE for the top ten non S-corp private banks was 17.78%.

Privately and Foreign Owned
Average ROAE among the top en private, subchapter S banks was 27.25%. Average ROAE for the top ten non S-corp private banks was 17.78%.

Who were the other top performing mid-size banks? Find out here.

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