Banking's Top Performers 2012, Part 1: Abridged Version

April 12, 2012 at 11:33 AM
As the industry began to regain its footing in 2011, several banks demonstrated performance at levels far above the rest. In the first part of our three-part analysis of bank earnings performance for the ABA Banking Journal, we identified the strategies that helped the largest banks (those with assets of $10 billion or greater) to succeed. Our top 15 banks and thrifts (10 publicly traded; 5 privately owned) achieved their elevated status by:
  1. Lending to Consumers:  Who says consumer lending is a thing of the past? Big credit card lenders like First National of Nebraska, Inc. (#7), and Capital One Financial, Inc. (#9), accounted for roughly half of the top 10 large public banks. Companies that stayed with the business during its recent lull are noticing renewed growth in both loan balances and servicing fees as consumer credit demand returns.
  2. Focusing on Businesses: US Bancorp (#2) was one of only three top performers to experience a year-over-year increase in net interest income. The bank can attribute this to a focus on commercial customers – US Bank experienced a 17% increase in C&I loans during 2011 and also redesigned its deposit product suite to better serve the needs of businesses, resulting in a corresponding increase in low-cost deposit balances.
  3. Lowering Costs of Funds: In 2011, raising deposits was easy for most banks. Knowing what to do with those deposits proved to be the key to top performer status. First Republic Bancorp (#3) increased core deposits from 70% to 82% of total deposits. The replacement of higher cost time deposits and borrowings with these funds led to a 22% decrease in the bank’s interest expense. It should be noted that First Republic also benefited from its focus on its wealth management business, which continued to generate fee income for the bank.
In addition, our top performers benefited from improved credit quality and accompanying declines in provision expense. Nevertheless, this proved to be a trend that benefited all large banks in 2011, not just our top 15. Strong credit quality, while an essential element of the business, is no longer enough to ensure strong earnings performance. Innovative strategies for growth will be the key to achieving top rankings in 2012.
The full article, rankings, and analysis can be found at This year, we have expanded our analysis to three parts. The second part, ranking mid-size banks (total assets of $1 billion to $10 billion), will appear in the May issue of the ABA Banking Journal. The third and final installment, ranking community banks (total assets of less than $1 billion) will appear in June.
Questions about the analysis and its methodology? Contact Vanessa Mambrino, Consultant.

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