The ingredients for standing out
The top-performing banks with less than $2 billion in assets posted gains in return on average equity, net interest margin and core deposit growth in 2025, while continuing to invest in technology and operations to strengthen their businesses and meet evolving customer needs.
Community banks overcame a key challenge in 2025 by growing deposits, a task that had proved difficult in previous years. Across the entire universe of banks, deposits increased 4%.
What separated the top-performing banks was their ability to maintain low overhead costs while growing efficiently. The banks were ranked by consulting firm Capital Performance Group based on their three-year average return on average equity, or ROAE, using data from year-end 2024.
Banks spent the last two years in a “painful competition to attract and retain deposits by paying higher and higher rates,” said Ally Akins, principal and marketing practice co-leader at Capital Performance Group.
“That pressure eased some in 2025,” she said. “More deposits at lower cost is a double win for bank earnings, and it was broadly shared across the industry.”
Matthew Prince, a business analyst at Capital Performance Group, said the banks that “genuinely earned their way to the top” shared several common strategies, including maintaining low-cost funding sources.
“Often through business checking accounts where customers park operating cash at little or no interest,” he said. “They also deployed that money into higher-yielding loans. They also kept costs lean and had few bad loans eating into profits.”
Read the full article (subscription required) by Maria Volkova on American Banker.
