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What Makes a Top Performing Bank
We spend a lot of time writing about technology at Bank Director, so it may come as a surprise to learn that most of the top performing banks in the country are the simplest of organizations.
Take ServisFirst Bancshares, the Birmingham, Alabama-based commercial bank that got started in 2005, before the last financial crisis, and built a customer-focused organization catering to small businesses with very few branches and little overhead. There’s no trust division, no wealth management and very few mortgages. With an efficiency ratio of 34.6% as of the first quarter, more dollars earned go to the bottom line.
Or take City Holding Co., also an extremely efficient bank with a simple business model, albeit focused on retail customers rather than commercial ones. Sticking to the business it knows in rural West Virginia, where it has a better chance to dominate the market, has paid off for City, according to Bank Director’s Director of Research Laura Alix.
Those banks appeared near the top of Bank Director’s 2023 RankingBanking study, an annual ranking of performance for the 300 largest publicly traded banks in the country, sponsored by Crowe LLP. The list, compiled by Piper Sandler & Co. using S&P Global Market Intelligence data, can be found here.
It’s not that technologically advanced banks do poorly. In fact, The Bancorp, based in Wilmington, Delaware, has performed consistently well for years, honing its banking as a service strategy after years of investment in compliance and infrastructure. It boasts longtime tech clients such as PayPal Holdings, Intuit and the neobank Chime. Banks that stay focused on their customers and aren’t chasing shiny objects seem to do better than others.
In a way, simplicity works for The Bancorp in the same way it works for City. It’s easy to outperform for just a year or two. But the banks that focus on what they know become the top performers year after year.
• Naomi Snyder, editor-in-chief for Bank Director
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