Banking Industry Financial Performance Update

September 21, 2015 at 4:00 PM

Mid-sized banks outperform larger banks; community bank profitability lags.

CPG analyzed bank performance for the twelve months-ended June 30, 2015, based on data from SNL Financial, LC.  Banks were categorized by three asset tiers: Large Banks defined as those institutions with assets of greater than $10 billion; Midsize Banks ($1 billion and $10 billion); and Community Banks (less than $1 billion).  To analyze industry performance, we examined a number of ratios and metrics including those related to profitability, yield, balance sheet and capital levels, asset quality, and growth.  Comparisons for each group were for the twelve months-ended June 30, 2014, versus the twelve months-ended June 30, 2015.

For the past twelve months-ended June 30, 2015, the Midsize Banks group was the most profitable asset tier group, recording a median ROAE of 8.33%. Reasons why the Midsize Banks outperformed the other groups include:

  • Midsize Banks grew loans significantly faster than any other asset tier.  The group achieved median net loan growth of 10.9%, year-over-year.  Loan growth for the group was driven by growth in 1-4 family loans, owner-occupied commercial real estate loans, and C&I loans.
  • Despite recording the highest expense growth rate, Midsize Banks achieved a significantly higher growth in revenue between periods.  This suggests that Midsize Banks were able to most successfully leverage their investments during the period.
  • Midsize Banks had higher asset quality than the other groups in terms of NPAs to total assets and NPLs to gross loans.

This quarter’s Banking Industry Financial Performance Update is provided free of charge. To download the full report (PDF), please click here.

Eileen Sullivan

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