Magazine article American Banker

1st Century, Heritage Oaks Top Sandler O'Neill Small-Cap Rankings

Magazine article American Banker

1st Century, Heritage Oaks Top Sandler O'Neill Small-Cap Rankings

Article excerpt

Byline: Chris Cumming

Sandler O'Neill included several new additions to its annual ranking of top-performing small banks and thrifts, suggesting that small lenders are slowly returning to pre-crisis health.

Twenty-nine banks and two thrifts made the investment bank's ninth annual list of the nation's top small lenders. Ten have never appeared on a previous version of the list.

As a group, the 2013 list performed far better than the industry as a whole over the last 12 months, with an average earnings per share of 16.5%, compared to 5.6% for all publicly traded banks and thrifts. The group's return on average assets was 11.3%, compared to 7.4% for all publicly traded banks and thrifts.

Loan and deposit growth also surpassed the overall industry. The 31 lenders had an average Tier 1 capital ratio of 12.4%, compared to less than 6% for all banks and thrifts that Sandler O'Neill evaluated.

This year's list suggests that small banks from states that were hit hard by the financial crisis and recession may be bouncing back, the company's research analysts said. While the list was dominated by banks in the mid-Atlantic states and the Northeast, as it has been every year since 2008, four California banks made this year's list, the most since 2006. Prior to 2008, banks from high-growth states used to dominate the rankings, with California accounting for roughly 30% of the list, Sandler O'Neill said.

The top performer on the list in terms of increased earnings per share in the past year, as a percent change, was 1st Century Bancshares (FCTY) in Los Angeles, followed by Heritage Oaks Bancorp (HEOP) in Paso Robles, Calif. …

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