Academic journal article ABA Banking Journal

Top Performers by More Than Numbers

Academic journal article ABA Banking Journal

Top Performers by More Than Numbers

Article excerpt

THE STORIES BEHIND THE TOP performing banks and thrifts in this year's community bank rankings are as varied as a Madras tablecloth. We didn't speak with all 100 banks listed, but between the three of us on staff, plus Vanessa Mambrino of Capital Performance Group, who wrote the first part of the cover report, we researched quite a few of them. Vanessa identifies three common themes in her article (p. 28)--exiting a business line or market; avoiding residential real estate (now there's a surprise!); and having a niche within commercial lending.

Immediately following the ranking article are mini profiles of four of the banks near the top of the rankings (p. 36). Two of the four profiles achieved their high ranking because of a singular event. In one instance (First East Side Savings, Tamarac, Fla.), exiting a market as a strategic decision led to a windfall, which was not only interesting of itself, but something that other institutions may consider.

All four profiled banks shared one thing in common: sound fundamentals, of which conservative lending was foremost. In the case of Michigan's Mackinac Financial Corp., the soundness resulted from a strong comeback--engineered by new owners and management--from near failure in 2003.

Three of the four banks would be considered very well capitalized. Such capital cushions tend to keep these banks much further down in the pack most years because it generally lowers their return on equity. In several cases, therefore, these banks wouldn't warrant a second look most years, based on ROE. But like the many consumers and businesses that didn't intone the "all debt is good" mantra, they can not only weather the current downturn comfortably, but can, with cash in hand, have their pick of just about anything (except gasoline) on the cheap. …

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