- June 20, 2018
- Posted by: Kevin Halsey
- Category: Analytics, Core Deposit Growth, Innovation, Strategy, Top Performers
Each year CPG partners with the American Banker to rank the top performing banks.
CPG, in conjunction with the American Banker Magazine, ranked and analyzed the nation’s top banks of 2017. This month, we focused on three groups of banks: community banks (defined as having assets of less than $2B), midsize banks ($2B to $10B), and large banks ($10B to $50B).
Across all asset tiers, 2017 was an interesting year for profitability. The passage of the Tax Cuts and Jobs Act in December caused many to write down deferred tax assets. These one-time write-downs were almost entirely responsible for the year-over-year decline in profitability. It was an otherwise great year. Net interest margins increased, efficiency ratios fell, and asset quality metrics improved.
Impressively, the top performing institutions in each group continued to deliver double-digit ROE though many were impacted by the write-downs. A key ingredient to their successes was balance sheet growth. The top performers in each group grew both core deposits and loans at a faster rate than peers. The ability to fund the balance sheet with cheap deposits proved important for many as it allowed their net interest margins to expand in a rising rate environment.
We believe relaxed regulations, rising rates, and lower taxes in 2018 should enable most banks to generate an ROAE of over 10% for the year. It will be interesting to see just how profitable the nation’s top banks will be in 2018 in light of these favorable industry headwinds.
A full ranking of the public community banks and midsize banks appears in the May and June editions of the American Banker Magazine, respectively. Both are also available online: Community Banks; Midsize Banks.
To obtain a spreadsheet that contains the complete rankings of banks, or for other information, please contact Kevin Halsey at firstname.lastname@example.org or 202-337-7873.