The Tortoise and the Hare: Which Regions Dominate RankingBanking?

*This feature is part of the 2026 RankingBanking report.

The United States is seen as the Land of Opportunity — and this holds true for the financial services system.

This country has a unique and vibrant financial services market with more than 4,000 banks spread out over 50 states and territories that cover more than 3.5 million square miles. These banks aim to serve the country’s more than 340 million people. Overall, the U.S. is the third largest country by land area and the third most populous country in the world.

Given this diverse landscape and population, there are wide ranging opportunities for banks.

This means that the region where a bank is located can influence its overall fortunes. “I think the key is knowing where your opportunities lie,” says Patrick Vernon, an advisory partner at Crowe Advisory, a professional services firm. “If you’re in a high-growth area or in a city that’s experiencing high growth, it’s a bit easier to fall into opportunities. If you’re not, you have to be a bit more strategic about where you’re focusing.”

As part of this year’s annual RankingBanking study, Bank Director broke down its list of the 300 largest publicly traded banks by states and regions. The listing by state can be found on BankDirector.com.

The following examines how regional economies affect banks’ ability not only to survive but to thrive. The four regions selected were the Northeast, the Midwest, the South and the West, plus the banks based in U.S. territories. The key data points for each region are based on information from the Federal Deposit Insurance Corp. and the RankingBanking list. RankingBanking was calculated by Piper Piper & Co. using data from S&P Global Market Intelligence.

“I don’t think [geography] always decides your destiny, but certainly it can follow the trends,” adds Kara Baldwin, a partner and the financial services audit lead at Crowe.

Northeast
The Northeastern part of the country is home to not only the global banking center of the U.S., but arguably that of the world. Megabanks JPMorgan Chase & Co. and Citigroup are headquartered in New York City, while the country’s two other largest institutions, Bank of America Corp. in Charlotte, North Carolina, and Wells Fargo in San Francisco, have a presence there. Outside of the Big Apple, there are other bustling metro centers, including Philadelphia, northern New Jersey and Boston, that help drive the economy in the region.

Residents of the Northeast have higher median household incomes than the U.S. in general. That leads to almost endless opportunities for banks based there.

“I don’t know of a banking product that is not offered in a very robust way in the Northeast,” says Andrew Sagliocca, vice chairman and CEO of Esquire Financial Holdings in Jericho, New York.

Still, the region is highly competitive, given the breadth of mega and large international banks that do business there. This increased pressure can drive down loan yields and hurt net interest margins, says Justin Crowley, a senior research analyst at Piper Sandler & Co. Research from the Federal Home Loan Bank of Boston that examined banks in six New England states — which are included in RankingBanking’s Northeastern region — found that these institutions posted worse results in several key categories compared with the rest of the country, including lower loan yields, higher cost of interest-bearing liabilities and a smaller return on average assets.

Lending opportunities in the Northeast also tend to be more heavily concentrated in commercial real estate and multifamily than other parts of the U.S., and that has squeezed profitability in recent years. Many of these institutions are still grappling with fixed-rate real estate loans originated when rates were significantly lower than today. “A lot of these banks are competing intensely for loans and deposits,” Crowley adds.

CRE loans are also generally seen as less risky than other lending categories, such as commercial and industrial credits, and that contributes to the lower yields in the region. “You have this dynamic where banks in the Northeast are trading growth for stability,” Crowley adds.

The $2.5 billion Esquire is one of the three Northeastern banks that made the 25 top performers list on Bank Director’s RankingBanking. To be successful in the region, smaller banks need to find a niche and excel at that, Sagliocca advises. Esquire focuses on two national business lines — providing banking products to plaintiff law firms and operating as a merchant acquiring bank. That helped Esquire land at the No. 3 spot this year.

Trying to be everything to everyone is a difficult strategy to execute, given that the megabanks operating in the region have more resources, better technology and larger operations to do that. “I think you need to identify a market or a niche or a vertical you want to focus on in the banking market and do that well,” he adds.

Midwest
One could perhaps consider the Midwest the tortoise of the regional economies. It enjoys a slower and steadier pace of growth. “The Midwest doesn’t experience the significant growth spurts, but it also then doesn’t have the same pullbacks,” says Nate Kauffman, executive director of the Kansas City Fed’s Center for Agriculture and the Economy.

So-called flyover country is home to a significant amount of agriculture and manufacturing, meaning that banks rely less on real estate lending in the region to generate profits. Michael Molepske, CEO and chairman of Bank First Corp. in Manitowoc, Wisconsin, notes that his markets in the upper Midwest offer several advantages for banks, including strong borrower credit scores and “a diverse economy, with manufacturing, agriculture, healthcare and service industries all playing important roles.”

That means banks, with the right expertise, can develop diversified loan portfolios while offering C&I loans to these companies. And in general, these types of lending opportunities can mean a better deposit franchise and lower cost of funding, Crowley says. The Midwest had the lowest median cost of interest-bearing deposits for community banks, according to an analysis of five different U.S. regions completed by S&P Global Market Intelligence.

Kauffman notes that Midwestern banks that do well tend to be well established in their communities and are able to adeptly respond to their customer needs. “That could be a metro area or a rural place where they have just become synonymous with that location and invested in their communities,” he adds.

Molepske emphasizes that relationship banking is key in the $5.9 billion Bank First’s success. The institution was No. 6 among the top 25 banks in RankingBanking. “We know our customers personally, stay closely connected to our communities and believe in meaningfully giving back,” he adds. “That combination builds trust and supports long-term partnerships, aligning well with community banking.”

Overall, five of the 25 top performers are based in Midwestern states. However, more than 1,900 of the country’s banks — or about 44% of U.S. banks — are headquartered in the region, according to data from the FDIC. Many of these institutions are small and privately held — and therefore aren’t eligible to be considered for the RankingBanking list.

But this does present acquisition opportunities for strong performing Midwestern banks looking to gain scale. “Most of these have really good deposit franchises because of where they are located,” says Mike Daniels, chairman and CEO of Nicolet Bankshares in Green Bay, Wisconsin, which was No. 10 on the RankingBanking list this year. He has led the $15.4 billion institution through 10 bank acquisitions over its 26-year history.

However, one challenge Midwestern banks face is slow population growth. That contributes to fewer new businesses being formed. Lower rates of immigration have further exacerbated the problem, Molepske says. “That means banks need to be intentional and disciplined in how they attract talent, win customers and create growth opportunities,” he adds.

South
If the Midwest is the proverbial tortoise, then one might consider the South the hare. “The South is a growth story,” Jonathan Hightower, a partner at the law firm Fenimore Kay Harrison, says of the region.

The population of the South ticked up by 6% from April 1, 2020, to July 1, 2025, according to the U.S. Census Bureau. That’s almost double the nation’s population growth of 3.1%. Eight of the 15 fastest growing cities were based in two Southern states, Florida and Texas, and the region’s gross domestic product surged 4.3% from 2020 to 2024, according to Visa Business and Economic Insights. That compares with 3.6% growth for the entire U.S. economy. “The weather plays a huge factor, and we generally have business-friendly state and local governments,” Hightower says.

Nine of the 25 top performers were based in six Southern states. That was the highest percentage of top performers of any of the regions.

Hightower notes that some of the best performing banks in the region are ones that can diversify their loan portfolios away from CRE credits. That allows these institutions to continue to serve their commercial clients as their banking needs grow and become more sophisticated.

Management at the $68.9 billion SouthState Bank Corp. in Winter Haven, Florida, likes to tout the various markets it is in across seven Southern states, plus Colorado. It recently entered Texas through an acquisition, with Houston reporting the highest loan growth of any market for all of SouthState, management said during its first quarter earnings call. “When you look at the map that has been built over the course of the last 15 or so years, that map is arguably in some of the best geographies in the country,” says Stephen Young, the bank’s chief strategy officer.

But this breakneck growth has also meant tumultuous downturns. The Southeast, which RankingBanking included in its Southern region, “is a market that can be more impacted by cyclical forces,” says Crowley, who noted that the Southeast has been “ground zero for issues” at times. For instance, the Atlanta metro area earned the nickname “The Ring of Death” during the 2007–09 financial crisis after dozens of community banks failed there.

Regulations were implemented in the aftermath of that crisis, such as the accounting change known as current expected credit losses, or CECL. However, that hasn’t been fully tested yet since the industry hasn’t gone through another credit cycle since then. “We thought Covid was going to be the thing, and it wasn’t,” Baldwin adds. “Charge-offs have been very low.”

The region, particularly Texas, has been an attractive location for acquisitions in recent years. These deals have had slightly higher credit marks on loan portfolios, which hints at concerns that the strong credit quality the industry has seen over the last few years won’t last forever, Vernon says. But these deals have also produced healthy premiums. That points to “confidence in the ability for the South to perform in the coming two-to-three-year period,” Vernon says.

West
In the West, it’s California or bust.

Overall, 35 banks out of the 300 on Bank Director’s RankingBanking call the Golden State home. According to data from the FDIC, there were 119 institutions headquartered in California. That means almost 30% of the state’s banks made the list. California institutions also accounted for seven (28%) of the 25 top performers. Only one Western bank from outside of California, the $65.4 billion Columbia Banking System in Tacoma, Washington, was a top performer.

California frequently surpasses Japan as the fourth largest economy in the world by gross domestic product and offers a variety of industries — everything from technology to agriculture to manufacturing — providing a diverse range of lending opportunities for banks. “It is a mini version of the U.S.,” says Christopher Thornberg, founding partner at Beacon Economics. “It has an enormous tech sector that does stand out. Beyond that, it has a little bit of a concentration of everything similar to the U.S. overall.”

Thornberg adds that California has high levels of consumer debt, but the state’s residents also boast better than average levels of income, leading to lower loan delinquency rates. Overall, the Western U.S. had the highest median household income.

California has had remarkably strong credit quality since the financial crisis, despite the regional bank failures in 2023, Thornberg says.

Outside of California, other western states offer their own contributions to the region’s economy. For instance, Phoenix, Arizona, has a growing microchip manufacturing industry, Las Vegas is well known for its gaming, and Wyoming has a bustling energy sector, Thornberg says. Retirees flock to the Southwest for the weather.

In general, California banks enjoy lower-cost deposits, which help to boost the bottom line, says A.J. Antongiovanni, CEO of the $2 billion Mission Bancorp in Bakersfield, California. The West had the lowest median cost of deposits for community banks out of the five different regions S&P examined. Antongiovanni touts Mission’s customer service, in part, for its success. “It is a focus on providing a level of banking to business owners that they don’t get at the largest institutions,” he adds.

To be sure, there are downsides to doing business in California, namely regulations, Antongiovanni says. This extends beyond issues specific to banking and can affect other areas, such as employment law. For instance, in California, it is easier for employees to file class action lawsuits for what could be deemed frivolous issues, he adds. Crime and homelessness are also significant in major cities in California and other Western cities, such as Portland, Oregon. “I think it is a problem for everyone,” Antongiovanni says. “We deal with it not just from a bank standpoint but just as a community member. Our people live here, our local businesses are here. We all go to the same schools and churches.”

U.S. Territories
The U.S. oversees the administration of five territories. Four banks from two of those territories appear on Bank Director’s RankingBanking list — three in Puerto Rico and one in Guam. None of these institutions made it in the top 25 banks, though the $19.2 billion First BanCorp in San Juan, Puerto Rico, was the highest rated at No. 39 overall.

Puerto Rico has faced issues in recent years, including its government almost defaulting on tens of billions in debt about a decade ago. But it seems as if the tide has turned, and there is a more positive business environment on the island. That means the banks there are enjoying some tailwinds, including a “good and stable” economy, according to a research note from Manuel Navas, managing director at Piper Sandler & Co. Positive factors include “stable government finances” and the “island’s geopolitical importance relative to Venezuela and Cuba,” Navas wrote. The U.S. has been using Puerto Rico as a strategic military hub for operations in South America and the Caribbean.

Aurelio Alemán-Bermudez, CEO at First BanCorp, noted during the company’s first quarter 2026 earnings call that an increased military presence in the territory has meant hotels are fully occupied, with an uptick in retail sales following as well. He added “commercial activity remains strong,” especially tourism. “Puerto Rico is very attractive for U.S. visitors.”

José Rafael Fernández, CEO and chairman of the $12.2 billion OFG Bancorp in San Juan, also touted Puerto Rico’s strengthening economy during the company’s first quarter earnings call. OFG tied for No. 75 on Bank Director’s ranking this year. For instance, Fernández pointed to the territory’s 30% debt to GDP and lower unemployment as positive factors. In May 2026, Puerto Rico’s unemployment rate stood at 5.6%, according to data from the Bureau of Labor Statistics.

Fernández said more companies are offshoring the production of pharmaceuticals and medical devices to Puerto Rico. He noted that about 45% of the territory’s economy is tied to manufacturing.

“[W]hat we’re seeing on the ground is high levels of liquidity, strong interest in building infrastructure [and] strong private investments,” Fernández said during the call. “I had lunch yesterday with commercial clients that are really putting more into play in the island in different industries. And I think the next several years in Puerto Rico are going to continue to be pretty steady growth.”

However, there could be some challenges on the horizon. Navas noted that higher energy prices could hurt the Puerto Rican economy.

Fernández also acknowledged the potential for some turbulence, including inflationary pressures and the threat that the U.S. could tumble into a recession. But he was still optimistic that the island was better positioned today to overcome those challenges.

“Puerto Rico is probably in its best economic position in many, many, many decades,” Fernández said.