Since 2017, Bank Director has analyzed the best in banking through its RankingBanking reports — looking at everything from building shareholder value to the best M&A deals. For the 2022 RankingBanking study, we’ve identified the best U.S. banks: those that balance growth and profitability, deliver long-term shareholder value and execute their goals in a safe and sound manner. We also examined the factors that drive this performance: growth, leadership, board oversight and — especially in today’s environment — technological innovation.
Banks that excelled in 2020 and early 2021 — the period examined in the 2022 RankingBanking study — “knew how to consistently adapt and pivot and turn while still managing risk,” says Kara Baldwin, a partner at Crowe LLP, which sponsored this report.
We sorted the banks into peer groups based on asset size, selecting the 10 best in each category using data from S&P Global Market Intelligence. The categories are:
- National Banks (Above $150 Billion)
- Regional Banks ($50 Billion – $150 Billion)
- Emerging Regional Banks ($15 Billion – $50 Billion)
- Small Regional Banks ($5 Billion – $15 Billion)
- Community Banks (Under $5 Billion)
To determine the top 10 in each category, we calculated a profitability score based on return on average assets (ROAA) and return on average equity (ROAE) as of year-end 2020. We also looked at year-over-year growth in pre-provision net revenue (PPNR) from 2019 to 2020, as well as absolute PPNR as of year-end 2020. Credit quality was also examined, based on net charge offs and nonperforming loans as a percentage of total loans for 2020. To award building shareholder value, we included five-year total shareholder return from 2015 to 2020. All of these factors were ranked and then averaged — with profitability receiving a double weight — to develop a score.
The final list includes the biggest banks, as well as regional and community banks leveraging traditional operating models in robust markets. Many took advantage of the mortgage boom, and some leaned into the digital economy. While high-performing, privately-held banks can be found across the country, we focused on public banks due to the wealth of data available on these institutions via Securities and Exchange Commission filings, press releases and other public information. We also excluded banks that issued announcements before July 1, 2021, that their organization would be acquired or merged into another institution.
Once the top 10 in each size category were selected, Bank Director then studied each institution across four subcategories that contribute to overall performance: leadership, board, innovation and growth. Each category has its own unique methodology, and each bank’s within-peer rank factored into its final score in the asset size categories. The result was a ranking of the best banks in the nation, banks that excel across multiple criteria: profitability, credit, shareholder value, executive and board leadership, and innovation.
The size-based category winners are JPMorgan Chase & Co., in New York (Best National Bank); SVB Financial Group, in Santa Clara, California (Best Regional); Western Alliance Bancorp., in Phoenix (Best Emerging Regional); Merchants Bancorp, in Carmel, Indiana (Best Small Regional); and FS Bancorp, in Mountlake Terrace, Washington (Best Community Bank).
The Best of the Best, by Asset Size
|CATEGORY||TOP-RATED BANK||TICKER||CATEGORY SCORE|
|Best National Banks
(Over $150 Billion)
|JPMorgan Chase & Co.||JPM||2.43|
|Best Regional Banks
($50 Billion – $150 Billion)
|SVB Financial Group||SIVB||3.00|
|Best Emerging Regional Banks
($15 Billion – $50 Billion
|Western Alliance Bancorp.||WAL||2.57|
|Best Small Regional Banks
($5 Billion – $15 Billion)
|Best Community Banks
(Under $5 Billion)
The Best Growth Strategy subcategory considered year-over-year growth from 2019 to 2020 in pre-provision net revenue (PPNR), total loans and total deposits, evaluating organic as well as total growth. These factors were ranked and averaged to produce a final score. University Bancorp rode the mortgage wave to a first-place finish. The $558 million, Ann Arbor, Michigan-based institution has spent years building a competitive niche in mortgage subservicing, which CEO Stephen Lange Ranzini says has led to 16 years of revenue growth and strong profitability. “There’s not that many businesses of any type across any industry that have a long-term track record of rapid growth and high profitability at the same time,” he says.
The growth category received a double weight in the final analysis due to its contribution to earnings potential going forward.
To select the Most Innovative Banks, we evaluated disclosed initiatives and projects in 2020 and midway through 2021. Given the importance of bringing in internal and external know-how, we also looked at whether the bank disclosed staff focused on digital, data or innovation, board-level expertise, partnerships with financial technology companies, as well as investments in and acquisitions of financial technology firms. Finally, we calculated technology spend as a percentage of noninterest expense, based on annual report data. Bank of America Corp., which applied for more than 400 patents in the first half of 2021, took top honors in this category.
FS Bancorp came out on top in the Best Leadership Teams category. Metrics examined included five-year total shareholder return and the combined tenure of the CEO and CFO, which reward long-term vision and execution. Diversity was examined, based on gender as well as total diversity, meaning the percentage of women, professionals from different ethnic and racial backgrounds, and members of the LGBTQ community, where disclosed. Ratings from the job search platforms Indeed and Glassdoor consider the leadership team’s reputation among current and former employees. Finally, an accomplishment bonus rewards significant initiatives, including M&A.
Leadership is vital to achieving long-term goals and establishing a vision that will carry the organization forward. FS Bancorp CEO Joseph Adams and his team have spent the past decade building a collaborative culture where the best ideas win out — one that prioritizes diverse perspectives. “‘Celebrate diversity and support equality for all’ is [a] core value,” Adams says.
Finally, boards play an important role in overseeing the bank, from safety and soundness and strategy to profitability and risk management. To determine the Best Boards, Bank Director evaluated several variables, including both gender diversity and total diversity, as defined in the leadership category, as well as board-level skills and expertise, including technology, audit, risk and related areas. We compared median compensation in 2020 to each bank’s ROAE as of December 2020 to examine the juxtaposition between the board’s pay and the performance of the institution. Scores developed by Institutional Shareholder Services to assess governance risk were incorporated where available. Finally, companies that disclose strong corporate governance practices — board evaluations or policies such as annual elections, term limits or mandatory retirement ages that can encourage new points of view — received bonus scores.
East West Bancorp’s board earned top honors in the board category due to the diversity and skill sets reflected in the boardroom as well as its governance practices, including annual elections and a yearly evaluation of its performance that includes the board’s composition, governance and risk practices, and committee operations.
The Best of the Best, Performance Drivers
|Category||TOP-RATED BANK||TICKER||CATEGORY SCORE|
|Best Growth Strategy||University Bancorp||UNIB||3.94|
|Most Innovative Banks||Bank of America Corp.||BAC||3.00|
|Best Leadership Teams||FS Bancorp||FSBW||7.60|
|Best Boards||East West Bancorp||EWBC||9.38|
The boards and leadership teams at successful banks weathered change while keeping their organization’s long-term goals in mind.
“These companies, from a growth standpoint, saw the challenges of Covid, and challenges that we experienced in 2020, and reacted [in two ways]. One was, ‘how do we manage our workforce and our customer base safely?’” says Rick Childs, a partner at Crowe. “At the same time, they [were] looking at, ‘how do we serve our clients? Where does growth come from? And what opportunities exist as a result of this?’”
And growth shouldn’t occur for growth’s sake, he adds. “Growth [should be] profitable and from a risk standpoint, well managed.”
At the close of the 2022 RankingBanking report, we identify the CEOs Behind the Best Banks. This isn’t a ranking on its own; rather, we identify the executives leading the best banks and explore the transformation of New York Community Bancorp — under new CEO Thomas Cangemi — from a thrift to a commercial bank positioned to meet today’s competitive challenges. Cangemi and his team are accelerating this transition through the acquisition of Flagstar Bancorp, in Troy, Michigan, and partnerships with technology companies. And all that transformation — of the balance sheet, of its ability to leverage technology — means that the organization’s culture will change, too.
“[The Flagstar] partnership is financially, strategically and culturally important,” says Cangemi. Big, transformative deals won’t have a successful outcome if the cultural fit and integration aren’t right. “[M]y job, as CEO, is to blend the culture. … That’s my role. Now we’re embracing ESG, we’re embracing [diversity, equity and inclusion]; we are embracing what needs to be embraced to make sure our culture is aligned.”