Half-way through 2006, the trends that influenced performance last year continue to challenge bankers to maintain the industry's five-year string of record-breaking profits. And while the industry continues to set records, there has been a considerable amount of change among the banks that do best in any given year, as the table opposite attests.
Banks last year enjoyed strong growth in commercial real estate and commercial and industrial lending, which made up for a decline in residential mortgage lending late in the year. The residential market was, and continues to be, a hot topic, with ongoing speculation on whether there is really a "bubble" and where and when it will burst.
Meanwhile, banks continue to make adjustable rate and interest-only mortgage loans.
Although the Federal Reserve raised the target Fed Funds rate eight times in 2005, ending the year at 4.25 %, long-term interest rates remained low, resulting in an inverted yield curve at year-end. With such low interest rates, many banks' loan portfolios bulged, and they struggled to find low-cost funding. Americans just weren't inclined to save their money, and rising interest rates encouraged businesses to seek out better returns on their cash.
With the continued squeeze on margins impacting profitability, institutions deriving a significant portion of their income from non-interest sources, including some of the very largest banks in the country, fared better than their more spread-dependent counterparts. Companies with large non-intermediation businesses, such as Citigroup, U.S. Bancorp, and Wells Fargo saw sharp upticks in their rankings during the year.
The year 2005 also saw the near extinction of the monoline credit card companies as Providian Financial, MBNA, and Metris were acquired, and Capital One announced it was buying Hibernia Bank (and more recently, North Fork Bank). Hurricanes Katrina, Rita, and Wilma wrought havoc on the Southeast, but the otherwise favorable economic conditions kept everyone afloat: 2005 was the first year since the FDIC was created that there were no bank failures.
In part one of the 14th annual ABA Banking Journal performance rankings, we review the financial results and strategies of the nation's largest banks and thrifts. Part two, which will appear next month, will high-light the top performing community banks and thrifts.
Selection criteria explained
Our study ranks the performance of domestic institutions with assets over $3 billion as of Dec. 31, 2005. Two groups were included in our analysis: publicly held depository institutions (banks, thrifts, and bank or financial holding companies) and private depositories. A total of 159 public banks, thrifts, and holding companies and 51 private institutions qualified under our selection criteria. They were ranked by return on average equity ("ROAE") for 2005. In instances where the reported ROAE was identical for two or more institutions, 2005 return on average assets was used as a secondary ranking criterion.
(Three banks that met our selection criteria were not included in our analysis, because their data was not available in time for this article. Those banks were: Doral Financial Corp., of San Juan, P.R.; First BanCorp of San Juan; and R&G Financial, of Hato Rey, P.R.)
By Stephanie Norwell, consultant, and Vanessa Mambrino, associate, Capital Performance Group LLC, Washington, DC, a firm providing advisory, planning, analytic, and project management support to the financial services industry.
Previous analyses included a ranking of specialty lenders, a category that historically was composed largely of mono-line credit card companies, sub-prime home mortgage lenders, and student lenders. With the acquisition or diversification of many of these companies, the pool of specialty institutions has shrunk to barely a dozen companies with assets over $3 billion. As a result, we chose to drop the separate specialty lender ranking.
Data was provided by SNL Financial, LC, as of December 2005. Securities and Exchange Commission filings were used as the source for public company data, and regulatory filings were the source used for private institutions.
A look at the Top 10
TCF Financial Corp. was the top performer this year with a return on average equity of 28.03%. The Wayzata, Minn.-based bank was able to weather some internal changes as well as pressure on its fee income to beat last year's number-four ranking (see profile, "A Step Beyond Convenience," page 40).
In second place was Fremont General of Santa Monica, Calif. The $11.5 billion-asset real estate lender topped last year's list with a whopping 42% ROAE, but at 27.50%, their 2005 ROAE was still high enough to keep them near the head of the class. The year didn't end well for Fremont, however. Their fourth quarter earnings were down 40% from a year earlier as margins on sales of securitized residential mortgages dropped significantly. Fremont has been near the top of our list for several years in a row now, so it will be interesting to see if a softening real estate market brings their run to an end.
Westamerica Bancorp., of San Rafael, Calif., dropped one slot to number three this year with an ROAE of 26.04%. Bank of Hawaii, another familiar name in the top ten, earned the number four spot. The Honolulu-based bank (profiled on page 40) is one of only ten banks with a presence in Hawaii and has the second-largest market share in the state, leaving little opportunity for continued growth on the islands.
The rest of the top ten were newcomers this year. New York-based Citigroup jumped from number 45 to number five, the first time in a while that one of the really big guys has been in the top ten. IndyMac Bancorp, of Pasadena, Calif., another real estate specialist, was in seventh place, and Corus Bankshares, of Chicago, Ill., which has been moving steadily up the ranks, was eighth. Investors Financial Services Corp., of Boston Mass., which specializes in securities processing services and held over 90% of its assets in securities, was number nine. Another California-based bank, CVB Financial Corp., of Ontario, rounded out the top ten.
The best vs. the rest, by the numbers The mean return on average equity for the top 25 was 21.02% in 2005, reflecting a decline of nearly two percentage points from the previous year. The change is due in part to the fact that last year's top performer had an ROAE of 42.00%, which skewed the average. By contrast, the mean ROAE across all 159 banks in the category this year was down 68 basis points to 13.51%. To be in the top 25, a bank had to earn an ROAE of 18.45%, 23 basis points lower than in 2004. Return on average assets dropped 12 basis points, on average, across the top 25 to 1.69%.
The top performers appear to have been more successful than their peers at finding alternative sources of revenue in last year's challenging interest rate environment. On average, their non-interest income as a percentage of total revenue was up 1.38 percentage points to 38.41%. Across all banks with assets greater than $3 billion, however, that portion dropped 1.45 percentage points to under 30%.
Median operating revenue growth in 2005 edged up to 9.69% for the top performers, a slight increase over the previous year. That same statistic was higher for all banks over $3 billion, but was 1.26 percentage points lower than in 2004. Median net income growth was exactly the same for the top performers as it was for the entire group; however, growth among the top 25 slowed by 2.86 percentage points in 2005, while growth across all banks in the category was down by only 95 basis points.
As was the case last year, the top 25 averaged lower loan-to-deposit ratios than the group as a whole, although the difference narrowed this year. Top performers sought to offset narrower margins with loan growth. The median net loan growth among the top performers was 14.35%, jumping 4.42 percentage points from 2004 and slightly outpacing their median deposit growth of 13.58%. While growth in residential mortgage loans slowed, the slack was taken up by commercial borrowing, including C&I, commercial real estate, and construction and development loans. Across all banks in the category, median net loan growth decreased by nearly five basis points, and median deposit growth slowed by 3.25 percentage points.
Both interest income and interest expense as a percentage of average assets increased slightly among the top performers, although the latter increased more due to the flattening yield curve. As a result, the average net interest margin dropped nine basis points to 3.69%. The group as a whole had a similar experience, and their average net interest margin fell one basis point to 3.57%.
Big turnover among private institutions Once again, there has been a large amount of shifting among the ranks of private institutions with assets of $3 billion or more. Not one of the institutions in this year's top ten holds the same position as it did last year. Four of the institutions in the top ten are included in the ranked pool of institutions for the first time as a result of changes in asset size and corporate reorganization.
This pool includes nonpublicly traded banks, thrifts, and holding companies as well as wholly owned financial institution subsidiaries of public nonbank financial services companies (where the subsidiary's results are broken out separately) with more than $3 billion in total assets.
This year, we have chosen to exclude wholly owned financial institution subsidiaries of publicly traded companies in other industries (e.g., GE Money Bank), as these institutions cannot be considered truly comparable to other private financial institutions. In total, 51 institutions were included in this year's analysis.
The top-ranked institution for 2005 is Midfirst Bank of Oklahoma City (ranked at number two the previous two years) with a 2005 ROAE of 43.85%. Midfirst displaced Beal Bank SSB of Plano, Texas, which dropped out of the pool of large institutions after its total assets declined below the $3 billion threshold in 2005. Other institutions leaving the top ten this year include Chevy Chase Bank, FBOP Corp., and People's Mutual Holdings.
Among institutions appearing in our top ten for the second year in a row, New York Private Bank & Trust dropped from number four to number ten. The other two recurring names from the 2005 top ten--FirstBank Holding Company and Ocean Bankshares--each improved their standings, moving from fifth to third and from seventh to fifth, respectively.
Three of the institutions that are being ranked for the first time: First National Bank Group of Edinburg, Texas; Riverside Banking Co. of Fort Pierce, Fla.; and First National Bank Holding Co. of Scottsdale, Ariz., have only recently crossed the $3 billion threshold for total assets. All three have appeared in our analysis of top-performing community banks in the past.
The other institution making its debut is Western Financial Bank of Irvine, Calif., appearing as the result of changes at the parent company level. The bank's results were not broken out separately from its parent, Westcorp of Irvine, Calif., in 2004, so it did not appear in last year's pool of institutions. As a public company, Westcorp was ranked number 42 in last year's analysis of large public institutions. Westcorp was acquired by Wachovia on March 1, 2006.
Two other institutions are new to the top ten, though not to our private institution rankings. CommerceBank Holding Corp. of Coral Gables, Fla., entered the top ten at number seven after being ranked fifteenth last year. This move is due in part to the company's strong real estate loan growth in Florida, New York City (specifically, Manhattan), and Texas; as well as to increases to its net interest margin resulting from improved credit quality. Finally, First Interstate BancSystem, Inc. of Billings, Mont., moved from twelfth to tenth. This jump was aided by the company's decision to focus on improving net income during 2005, resulting in an increase of 20.5%.
Many of the 2005 top performers were heavily involved in real estate lending and benefited from low interest rates and a robust market through most of the year. However, the fourth quarter--and results from early 2006--showed signs that this year's top performers may not be real estate lenders. Interest rates continued to rise, the yield curve started to regain its customary upward slope, and homes in even the hottest real estate markets lingered unsold.
This year, banks and thrifts may see an uptick in delinquencies and charge-offs in consumer portfolios as the fixed-rate period for many three and five year option ARMs ends and borrowers must make fully amortizing payments.
On the commercial side, rising interest rates may cause commercial borrowers to postpone projects and thereby dampen loan demand. In addition, there are growing regulatory concerns about concentrations in commercial real estate and commercial real estate construction and development loans that may impact the willingness--or ability--of some banks to continue to grow these portfolios aggressively.
A closer look at three standouts
Bank of Hawaii
What comes after efficiency?
At a March 2006 investor conference, Bank of Hawaii Chairman and CEO Allan Landon alluded to the possibility that BOH--one of only ten banks with a presence in Hawaii--might once again venture onto the mainland. His statement that "it would be a mistake not to evaluate [expansion outside Hawaii]" was a departure from his stance in May 2005, when he insisted that looking to Asia and California "probably wasn't something they would see doing." The bank has been gun shy about expanding onto the mainland after a failed pan-Pacific strategy in the 1990s. At that time, Pacific Century Financial, as the company was known, sought to develop a dominant presence throughout the Pacific in response to a weak economy in Hawaii. Then CEO, Lawrence M. Johnson, decided to expand into Arizona and California as well as in the South Pacific and Asia, but the strategy ultimately resulted in rising loan losses and regulatory intervention. In 2001, a new CEO, Michael O'Neill, took the helm and led a three-year turnaround. The bank has continued to have success under Allan Landon, who succeeded O'Neill in September 2004. Hawaii has had a robust economy in recent years, and in the absence of expansion opportunities on the islands, Landon has focused on efficiency. His goal for the 2005 efficiency ratio was 55%, but he managed to bring it down to 53.4%. The bank's longer-term goal is to bring that ratio under 53%.
While a 53% efficiency ratio is admirable, a bank cannot save its way to prosperity. The $10.2 billion bank already has a large market share in Hawaii--nearly a third of deposits--so expansion opportunities on the islands are very limited. While deposit generation historically has not been a problem for BOH, it has struggled to grow commercial loan balances. The bank's highly liquid commercial customers tend to pay down loans quickly, and the service sector, which constitutes the majority of business in Hawaii, does not borrow a great deal. These circumstances leave Bank of Hawaii in a tight spot. Landon must find other ways to deliver the increasing returns investors demand, because a bank can only be so efficient before other areas of the business, such as customer service and product development, begin to suffer. So as he implied earlier this year, the bank may decide that geographic expansion is its best option. Or perhaps it will diversify into new lines of business. In either case, chances are that if Bank of Hawaii is on the top performer list next year, it will be because the bank found new opportunities for growth, rather than new ways to save money.
A step beyond convenience
The year 2005 was a time of transition for TCF Financial Corp. With the new year came a new CEO; Lynn A. Nagorske replaced William A. Cooper as he retired after serving 20 years as the chief executive of the Wayzata, Minn.-based bank. The year was spent tweaking the $13 billion-asset bank's growth strategy as it faced pressure on deposit service charges and worked to continue expansion in existing markets. Things seemed to work out well in the end, however, as TCF bested last year's fourth place ranking with a move to number one.
Historically, TCF differentiated itself as the bank that targeted blue-collar households--Cooper liked to refer to his typical customer as "Joe Lunchbucket"--and the bank that specialized in convenient service. TCF pioneered the concepts of free checking, seven-day-a-week banking hours, and supermarket branches. But by 2005, many large retail banks were offering free checking, extended branch hours were commonplace, and TCF was moving away from its supermarket strategy. Additionally, the bank was faced with declining deposit fee income--revenue from fees and service charges decreased by more than $12 million between 2004 and 2005. So although TCF is still dedicated to "Convenience Banking," it has been seeking other ways to grow through a new branching focus, expansion into a new market, diversifying business lines, and adding new products and services.
TCF plans to continue its de novo branching by adding 24 branches this year to its existing 453 (as of Dec. 2005). Some of those branches will be in supermarkets, but the emphasis will be on expansion of the traditional branch network, particularly in Illinois, Michigan, Colorado, and Arizona. The latter is a new market for TCF, and the bank plans to open several consumer loan production offices in the Phoenix metropolitan area this year.
TCF's equipment leasing and finance portfolio has been growing steadily over the past several years. The bank acquired VGM Leasing in March of 2004, but with no new acquisitions in 2005 the portfolio still grew 9% to $1.5 billion.
TCF also has been developing new products and services, particularly in the payments area. The bank now offers check cashing in select locations for both customers and non-customers. TCF also has introduced gift cards as well as new debit and charge-card loyalty programs. The new card emphasis appears to be a good bet; TCF grew card revenue by over 25% in 2005. Given that card transactions are projected to account for nearly half of payments transactions by 2009, TCF has a significant opportunity to exploit that source of revenue.
Riding the real estate wave
Downey Financial Corp., a thrift from Newport Beach, Calif., was one of ten California institutions to make the Top 25 this year. Downey is almost exclusively a real estate lender and specializes in adjustable rate mortgages. The company made a dramatic turnaround in 2005, due in part to the sale of most of its mortgage servicing portfolio at the end of 2004. The portfolio had been causing wild fluctuations in Downey's earnings, and sale of those servicing rights proved to be a good move. Having removed that volatility, Downey benefited greatly from last year's low interest rates with a surge in mortgage originations and huge gains on the sale of its ARMs on the secondary market.
Those ARMs have been a source of controversy and a hot topic among the regulators in recent months. Lenders on the West Coast have been making option ARMs since the 1980s but had not faced much scrutiny until recently, as the practice became a nationwide trend and volumes shot up. Lenders are now being asked to disclose more information on their level of ARM activity and the use of negative amortization.
The concerns have arisen amid growing loan balances and inflated home prices in many U.S. markets as well as what appear to be, in some cases, looser underwriting standards.
Historically, Downey has provided more information about ARMs in its filings than other institutions, and its 2005 10K revealed that $13.4 billion-87%-of its $15.5 billion loan portfolio was subject to negative amortization. Indeed, 74% of those $13.4 billion in loans did have negative amortization as of Dec. 31, 2005, and $8.6 billion worth had balances greater than the original loan amount. If the booming California real estate market goes bust, Downey could be in trouble.
Evidence of Downey's vulnerability to real estate market fluctuations has become apparent since the end of last year. Although Downey had a great year in 2005 as a whole, fourth quarter results suggested that 2006 might not be so rosy, as net income was down 10% from the previous year.
Downey's first-quarter 2006 earnings release revealed a 13.5% decrease in net income over the first quarter of 2004. The largest contributing factors were a $19 million decline in net gains on sales of loans and mortgage-backed securities and an $8 million increase in provision for credit losses.
Top 25 by 2005 ROE Publicly held BHCs, banks and thrifts with assets over $3 billion * Total 2006 2005 assets 2005 2005 Rank Rank Institution (000) ROAE ROAA 1 4 TCF Financial Corp., $13,365,360 28.03% 2.08% Wayzata, MN (bank) 2 1 Fremont General Corp., 11,484,113 27.50 3.00 Santa Monica, CA (bank) 3 2 Westamerica Bancorp., 5,149,209 26.04 2.12 San Rafael, CA (bank) 4 10 Bank of Hawaii Corp., 10,187,038 24.83 1.81 Honolulu, HI (bank) 5 13 U.S. Bancorp, 209,465,000 22.50 2.21 Minneapolis, MN (bank) 6 45 Citigroup Inc., New 1,494,037,000 22.14 1.66 York, NY (bank) 7 70 IndyMac Bancorp, 21,452,299 22.00 1.41 Pasadena, CA (thrift) 8 37 Corus Bankshares, 8,458,740 21.77 2.06 Chicago, IL (bank) 9 12 Investors Financial 12,096,393 21.07 1.32 Services Corp., Boston, MA (bank) 10 16 CVB Financial Corp., 5,422,971 20.87 1.45 Ontario, CA (bank) 11 26 AmSouth Bancorp., 52,607,110 20.44 1.43 Birmingham, AL (bank) 12 8 First Horizon National 36,579,061 20.43 1.20 Corp., Memphis, TN (bank) 13 28 UnionBanCal Corp., San 49,416,002 20.16 1.81 Francisco, CA (bank) 14 19 Wells Fargo & Company, 481,741,000 19.59 1.72 San Francisco, CA (bank) 15 114 Downey Financial Corp., 17,094,349 19.56 1.31 Newport Beach, CA (thrift) 16 17 Pacific Capital 6,876,159 19.18 1.55 Bancorp, Santa Barbara, CA (bank) 17 11 Valley National 12,436,102 19.17 1.39 Bancorp, Wayne, NJ (bank) 18 21 Independent Bank Corp., 3,355,848 19.12 1.45 Ionia, MI (bank) 19 14 Mellon Financial Corp., 38,678,000 18.98 2.10 Pittsburgh, PA (bank) 20 6 Oriental Financial 4,246,865 18.84 1.39 Group, San Juan, PR (bank) 21 25 First Midwest Bancorp, 7,210,151 18.83 1.44 Itasca, IL (bank) 22 30 Cullen/Frost Bankers, 11,741,437 18.78 1.63 San Antonio, TX (bank) 23 20 Golden West Financial 124,615,163 18.72 1.27 Corp., Oakland, CA (thrift) 24 22 Compass Bancshares, 30,798,232 18.52 1.36 Birmingham, AL (bank) 25 34 Synovus Financial 27,620,672 18.45 1.96 Corp., Columbus, GA (bank) Non- 2005 interest 2006 core income/ P/E Capital Rank Institution ROAE total rev ratio ratio 1 TCF Financial Corp., 26.36% 45.59% 13.57x 10.68% Wayzata, MN (bank) 2 Fremont General Corp., 27.50 45.16 8.07 15.52 Santa Monica, CA (bank) 3 Westamerica Bancorp., 26.23 21.97 15.61 10.40 San Rafael, CA (bank) 4 Bank of Hawaii Corp., 24.35 33.08 14.98 12.70 Honolulu, HI (bank) 5 U.S. Bancorp, 22.94 46.95 12.05 12.50 Minneapolis, MN (bank) 6 Citigroup Inc., New 16.50 49.81 8.86 12.02 York, NY (bank) 7 IndyMac Bancorp, 22.17 61.88 8.95 12.50 Pasadena, CA (thrift) 8 Corus Bankshares, 20.46 5.50 10.66 14.38 Chicago, IL (bank) 9 Investors Financial 19.42 72.75 15.35 18.50 Services Corp., Boston, MA (bank) 10 CVB Financial Corp., 20.82 15.02 18.46 12.00 Ontario, CA (bank) 11 AmSouth Bancorp., 19.55 35.50 12.60 11.40 Birmingham, AL (bank) 12 First Horizon National 20.58 58.72 11.31 12.30 Corp., Memphis, TN (bank) 13 UnionBanCal Corp., San 17.83 32.33 8.22 11.10 Francisco, CA (bank) 14 Wells Fargo & Company, 19.07 42.64 13.78 11.64 San Francisco, CA (bank) 15 Downey Financial Corp., 19.51 39.88 11.40 14.93 Newport Beach, CA (thrift) 16 Pacific Capital 19.33 26.25 37.09 11.33 Bancorp, Santa Barbara, CA (bank) 17 Valley National 19.20 14.65 15.06 12.16 Bancorp, Wayne, NJ (bank) 18 Independent Bank Corp., 18.83 22.82 13.35 10.27 Ionia, MI (bank) 19 Mellon Financial Corp., 19.09 85.71 17.12 16.87 Pittsburgh, PA (bank) 20 Oriental Financial 17.31 22.62 NA 37.50 Group, San Juan, PR (bank) 21 First Midwest Bancorp, 19.31 25.10 17.89 11.76 Itasca, IL (bank) 22 Cullen/Frost Bankers, 18.43 36.29 16.57 14.94 San Antonio, TX (bank) 23 Golden West Financial 18.72 13.60 12.99 13.02 Corp., Oakland, CA (thrift) 24 Compass Bancshares, 18.37 40.07 14.89 11.48 Birmingham, AL (bank) 25 Synovus Financial 18.44 66.43 15.35 14.23 Corp., Columbus, GA Nonperfor. 2006 Efficiency loans/ Rank Institution ratio total Ins 1 TCF Financial Corp., 62.37% 0.28% Wayzata, MN (bank) 2 Fremont General Corp., 40.66 0.57 Santa Monica, CA (bank) 3 Westamerica Bancorp., 36.20 0.24 San Rafael, CA (bank) 4 Bank of Hawaii Corp., 53.40 0.09 Honolulu, HI (bank) 5 U.S. Bancorp, 41.68 0.39 Minneapolis, MN (bank) 6 Citigroup Inc., New 55.57 0.85 York, NY (bank) 7 IndyMac Bancorp, 53.59 0.45 Pasadena, CA (thrift) 8 Corus Bankshares, 22.92 0.33 Chicago, IL (bank) 9 Investors Financial 67.99 0.00 Services Corp., Boston, MA (bank) 10 CVB Financial Corp., 44.51 0.00 Ontario, CA (bank) 11 AmSouth Bancorp., 52.89 0.28 Birmingham, AL (bank) 12 First Horizon National 69.18 0.21 Corp., Memphis, TN (bank) 13 UnionBanCal Corp., San 59.04 0.18 Francisco, CA (bank) 14 Wells Fargo & Company, 57.61 0.38 San Francisco, CA (bank) 15 Downey Financial Corp., 38.49 0.22 Newport Beach, CA (thrift) 16 Pacific Capital 48.87 0.34 Bancorp, Santa Barbara, CA (bank) 17 Valley National 48.30 0.32 Bancorp, Wayne, NJ (bank) 18 Independent Bank Corp., 55.72 0.51 Ionia, MI (bank) 19 Mellon Financial Corp., 73.57 0.24 Pittsburgh, PA (bank) 20 Oriental Financial 38.36 2.40 Group, San Juan, PR (bank) 21 First Midwest Bancorp, 49.10 0.28 Itasca, IL (bank) 22 Cullen/Frost Bankers, 57.99 0.55 San Antonio, TX (bank) 23 Golden West Financial 28.33 0.32 Corp., Oakland, CA (thrift) 24 Compass Bancshares, 55.01 0.23 Birmingham, AL (bank) 25 Synovus Financial 68.16 0.38 Corp., Columbus, GA Source: SNL Data Source, LLC. * Excludes three BHCs, all based in Puerto Rico, which had not filed 2005 earnings as of April 20, 2006 Private institution ranking * By 2005 ROAE. Total 2006 2005 assets 2005 rank rank ** Institution (000) ROAE 1 2 Midfirst Bank, Oklahoma $10,089,076 43.85% City, OK (thrift) 2 N/A First National Bank Group, 3,136,731 28.44 Edinburg, TX (bhc) 3 5 FirstBank Holding Co., 7,245,166 21.95 Lakewood, CO (bhc) 4 N/A Western Financial Bank, 15,878,043 18.94 Irvine, CA (thrift) 5 7 Ocean Bankshares, Miami, 5,676,460 18.79 FL (bhc) 6 N/A Riverside Banking Co., 3,291,243 18.64 Fort Pierce, FL (bhc) 7 15 Commercebank Holding 4,224,240 18.02 Corp., Coral Gables, FL (bhc) 8 4 New York Private Bank & 14,642,982 17.30 Trust Corp., New York, NY (bhc) 9 N/A First National Bank 3,647,565 17.10 Holding Co., Scottsdale, AZ (bhc) 10 12 First Interstate 4,559,490 16.62 BancSystem, Billings, MT (bhc) 2006 2005 rank Institution ROAR 1 Midfirst Bank, Oklahoma 3.21% City, OK (thrift) 2 First National Bank Group, 1.13 Edinburg, TX (bhc) 3 FirstBank Holding Co., 1.66 Lakewood, CO (bhc) 4 Western Financial Bank, 1.40 Irvine, CA (thrift) 5 Ocean Bankshares, Miami, 1.87 FL (bhc) 6 Riverside Banking Co., 1.38 Fort Pierce, FL (bhc) 7 Commercebank Holding 0.95 Corp., Coral Gables, FL (bhc) 8 New York Private Bank & 1.01 Trust Corp., New York, NY (bhc) 9 First National Bank 0.84 Holding Co., Scottsdale, AZ (bhc) 10 First Interstate 1.26 BancSystem, Billings, MT (bhc) * This listing includes nonpublicly traded banks, thrifts and holding companies over $3 billion and wholly owned financial institution subsidiaries of publicly traded financial services companies (where the subsidiary's results are broken out separately). Source: SNI. Data Source, LLC. Summary statistics public banks/thrifts with assets over $3 billion Top 25 FINANCIAL HIGHLIGHTS (average) 2005 2004 Change Return on average equity 21.02% 23.00% (1.98) Return on average assets 1.69 1.81 (0.12) Core ROAE 20.41 22.35 (1.93) Non-interest income/total 38.41 37.03 1.38 revenue Price/earnings 14.34x 15.63x (1.29) Capital ratio 13.85% 14.64% (0.79) Efficiency ratio 51.18 51.45 (0.27) Nonperforming loans/total 0.40 0.64 (0.24) loans INCOME AND EXPENSE RATIOS (average) Loans/deposits 88.58% 86.41% 2.17 Interest income/avg assets 5.26 4.81 0.46 Interest expense/avg assets 1.99 1.44 0.55 Noninterest income/avg assets 2.60 2.51 0.09 Noninterest expense/avg 3.26 3.22 0.04 assets Net interest margin 3.69 3.78 (0.10) GROWTH (median) Asset growth 9.28% 13.02% (3.74) Deposit growth 13.58 13.18 0.40 Net income growth 12.84 15.70 (2.86) EPS growth 11.60 15.53 (3.93) Operating revenue growth 9.69 9.25 0.44 Net loan growth 14.35 9.93 4.42 All institutions * FINANCIAL HIGHLIGHTS (average) 2005 2004 Change Return on average equity 13.51% 14.19% (0.68) Return on average assets 1.22 1.24 (0.02) Core ROAE 13.54 14.09 (0.55) Non-interest income/total 29.54 30.99 (1.45) revenue Price/earnings 16.87x 18.09x (1.22) Capital ratio 13.61% 13.74% (0.12) Efficiency ratio 55.87 57.52 (1.66) Nonperforming loans/total 0.45 0.53 (0.08) loans INCOME AND EXPENSE RATIOS (averag Loans/deposits 95.71% 95.37% 0.34 Interest income/avg assets 5.19 4.67 0.51 Interest expense/avg assets 1.98 1.45 0.53 Noninterest income/avg assets 1.63 1.78 (0.15) Noninterest expense/avg 2.86 3.01 (0.14) assets Net interest margin 3.57 3.59 (0.01) GROWTH (median) Asset growth 8.32% 13.44% (5.12) Deposit growth 9.80 13.05 (3.25) Net income growth 12.84 13.79 (0.95) EPS growth 10.66 9.75 0.91 Operating revenue growth 10.80 12.06 (1.26) Net loan growth 10.75 15.70 (4.96) * All institutions represents the total set of institutions with over $3 billion in assets in a given year. In 2005, there were 159 institutions that met this criteria; in 2004 there were 154. Source: CPG analysis of data from SNL Data Source, LLC.…