Who are ICBA’s top-performing community banks?

Less than $300 million

The Philadelphia Trust Company
Philadelphia, Pa.

Assets: $20 million
3yr average ROA: 7.52%

The Philadelphia Trust Company: Main Street in the big city

The Philadelphia Trust Company isn’t like most community banks. As an independent private bank catering to high-net-worth investors and institutions, it deals more in stock and bond portfolios than mortgages or small-business loans. Its president and CEO, Michael Crofton, is a papal knight, and its chairman, George Marlin, is a former CEO of the Port Authority of New York and New Jersey.

But that’s not to say there aren’t parallels to be drawn. Just as an agricultural lender in the rural Midwest wrestles with the weight of compliance, so does this FDIC-regulated depository and trust company—but it has found success despite this burden.

According to Crofton, “Attention to detail and disciplined operations have contributed to our recent success in an increased regulatory banking environment over the past few years.”

And like other banks of its size, the Philadelphia Trust Company contrasts itself with the megabanks. “We offer a personalized service to clients who may not receive the same treatment at other, larger banks,” says Crofton.

Clients go straight to their portfolio managers, rather than through an intermediary such as a salesperson. This hotline between advisor and investor minimizes unnecessary admin time and allows each client’s risk tolerance to be evaluated precisely.

And for Crofton, efficiency is everything. “Running a lean operation utilizing an experienced and focused staff has led to our favorable return metrics,” he says.

And what community bank doesn’t aspire to that?

CBW Bank
Weir, Kan.

Assets: $31 million
3yr average ROA: 6.23%

CBW Bank: Rewiring banking

The cutting edge can show up in the unlikeliest of places. From its unassuming HQ in Weir, Kan. (pop. 661), CBW Bank has launched some of the industry’s most advanced technology.

Husband-and-wife team Suresh Ramamurthi, now chairman and CTO, and Suchitra Padmanabhan, now president, bought the Citizens Bank of Weir in 2009. Last year, Independent Banker named Ramamurthi one of three Innovation Award winners for his work on ONECard, the industry’s first digital banking architecture that makes real-time payments across multiple channels possible.

But while the bank is renowned for its technological innovation, Ramamurthi says the secret of its success is rather less glamorous: compliance. “We embedded a real-time risk-scoring engine into our digital banking platform,” he says. “This enabled [us] to safely and securely process real-time payments and ensured that our system was built on a process-friendly platform, which allows us to quickly add new services without taking on inordinate risks or increasing exposure to fraudulent transactions.”

Today, CBW is focused on building its wholesale payment services business line: It’s offering fee-based access to its white-label APIs to fintech startups and banks looking to build a portfolio of innovative products and services. As Ramamurthi says, “That is the mission: to leverage our proprietary technology to build solutions that meet the evolving financial needs of both consumers and businesses.”

The Federal Savings Bank
Chicago, Ill.

Assets: $297 million
3yr average ROA: 5.70%

30 seconds with… The Federal Savings Bank

The Federal Savings Bank, a privately held, veteran-owned, federally chartered bank, lends across all 50 states. According to chairman and CEO Steve Calk, the bank’s aim is to demystify the process of borrowing from a bank and expand home ownership in America.

IB: What makes you successful?
Calk: Our outstanding success is directly attributable to our team of banking professionals, all laser focused on the success of our customers and the accomplishment of their goals.

IB: Any words of wisdom for other banks?
Calk: I highly recommend you focus on a few core, profitable products while ensuring you measure, monitor and control all aspects of your banking platform. Be decisive. Ensure you create and measure key performance indicators so you can recognize unproductive, unprofitable products, procedures and people quickly [and] make changes before they cause too much damage.

$300 million to $1 billion

State Bank of Texas
Dallas, Texas

Assets: $985 million
3yr average ROA: 7.03%

State Bank of Texas: How a hotelier conquered banking

State Bank of Texas lays claim to one of those “only in America” stories. It all started when founder Chan Patel moved from Mumbai, India, to the US to attend Stanford University. Two master’s degrees and one programming job later, he bought the first of what would eventually be 17 hotels.

Having achieved his American dream—at least the first part of it—Patel turned his attention to his fellow immigrants. He saw how their bright entrepreneurial ideas often sputtered and died because most banks weren’t willing or able to lend to them, and he decided to do something about it.

After putting up $1 million of his own money and raising another million from friends and family, he opened State Bank of Texas in 1987, shortly after Black Monday. Its primary aim was to lend to the immigrant community, particularly those in the hospitality industry.

Today, Patel remains chairman and CEO and has been joined by his sons, Sushil and Rajan, who are also part-owners, and CFO Janna Hayes. Sushil Patel, who is the bank’s president, places its status as a family owned and operated business at the heart of its success story. “At the end of the day, we know the buck stops with us as far as losses and all decision making,” he says. “We do not have any layers to go through, and [that] allows us to be a much more nimble bank.

State Bank of Texas’s focus on lending in the hospitality industry remains, but over the past decade it has also carved out a niche acquiring failed banks and reviving their fortunes. The most recent was January’s FDIC-brokered acquisition of Chicago’s 10-branch Seaway Bank, once the largest black-owned bank in America, which was badly damaged by the subprime mortgage crisis. As part of the deal, State Bank of Texas assumed $304 million in deposits and purchased $309 million of Seaway’s assets.

Sushil Patel says a challenge for the medium term will be the “seamless transition of Seaway loan staff and customers into our SBT family.”

In the longer term, Chan Patel and his team plan to continue to power the bank’s growth through hard work, ingenuity and, most importantly, boots on the ground. “When loans start to experience difficulties is the time to get out from behind the desk,” Sushil Patel says. “More solutions tend to present themselves the more educated you are about the loan, which is difficult to do [from] behind a desk.”

And if that’s not the quintessential community-bank approach, then what is?

Lawton, Okla.
Assets: $385 million
3yr average ROA: 3.73%


4 facts about… FSNB

  • It started life in 1942 as a check-cashing facility on the Army post of Fort Sill, home of the U.S. Field Artillery School, in Lawton, Okla.
  • J.R. “Dolph” Montgomery expanded this into a full-service bank for Fort Sill military personnel in 1946. It now has branches in 10 states.
  • It’s a family affair; Montgomery’s daughter, Zelda Davis, is vice chairman of the board, and his grandson, John Davis, is chairman.
  • It’s been Marine/Navy Bank of the Year almost every year running since 1996. It has a similar string of awards from the Army and the Air Force.

Apex Bank: A force under 40

Apex Bank
Camden, Tenn.

Assets: $494 million
3yr average ROA: 3.70%

On paper, Matt Daniels is a veteran banker. He became CEO of Tennessee’s First State Bank, later renamed Clayton Bank and Trust, in 2004. In 2008—a trying year for the industry, to put it mildly—he and his former mentor and boss, Jim Clayton, became equal partners with the purchase of Bank of Camden. As CEO of the rebranded Apex Bank, Daniels has spearheaded tremendous growth at the community bank, which offers retail deposit services and consumer and commercial lending. In less than a decade, after completely revamping its business model, it has tripled its locations and staff and increased its total assets from $157 million to almost $500 million. It’s quite the laundry list of accomplishments—but Daniels isn’t even 40 yet.

IB: What makes Apex Bank successful?
Daniels: In traditional banking areas, our commitment to excellent customer service and dedication to the communities we serve has led to our success. We also identify niche markets, run by our “small business units,” that have allowed us to grow in areas ignored by most. Our work ethic, flexibility and urgency have been the key components to growth and profitability in these niche markets, but our talented team members really get the credit for our performance. We encourage them to become autonomous in their positions. We hire experience and let them do the job.

IB: What are your plans for the next few years?
Daniels: We plan to grow our community banking network through acquisitions [Apex acquired Greeneville-based American Patriot Bank at the end of last year] and new branch deployment, while expanding our ATM footprint. We will continue to invest in our small business units and develop those niche markets.

IB: Any words of advice for other community banks?
Daniels: Find or better define your strengths. Continued industry consolidation will force us all to be more creative and proactive in pursuing niche markets.

Over $1 billion

Stearns Bank N.A.
St. Cloud, Minn.

Assets: $1.9 billion
3yr average ROA: 3.47%

Stearns Bank: Never stop moving

Life is moving pretty fast in this industry. Nimble fintech firms are snapping at the heels of traditional institutions, and millennials are demanding more innovation from community banks as both customers and employees. So if you heard about a century-old community bank in the upper Midwest whose CEO had been in the job since 1964, you’d be forgiven for assuming it was in desperate need of a change of pace.

Not so Stearns Bank. Since Norm Skalicky took the helm more than 50 years ago, he’s proved a willingness to shake things up again and again. In that time, he and his team have made a big name for themselves in the small-business lending and equipment financing arenas and, since the subprime mortgage crisis, as an acquirer of distressed banks across the country. It’s also one of the few community banks to specialize in originating low-income housing loans under the Low Income Housing Tax Credit program, and it prides itself on its employee benefits program, which includes training opportunities and time off for community work. Under Skalicky’s watch, this once-rural bank has become a creative force to be reckoned with.

True to its entrepreneurial spirit, Stearns Bank will be tracking new opportunities for niche lending in the short to medium term, according to Skalicky. It plans to shore up its leasing, small-business and government-guaranteed lending interests, with “high-focus personal service and quick turnaround in funding,” says Skalicky. The bank is also exploring further acquisition opportunities to add to its growing nationwide network; past acquisitions of distressed banks mean its branch base has expanded beyond Minnesota to the warmer climes of Florida and Arizona.

And for all fintechs’ talk of nimbleness, Stearns Bank is no lumbering cargo ship, hampered by the weight of hundreds of shareholders. Skalicky holds the majority of shares, with the remainder held by family members, employees and directors, meaning decisions can be made quickly. “We dare to be different,” he says. “We focus on maintaining an industry-leading net interest margin by being creative in structuring deals, with the rewards far exceeding the risks.”

Indeed, Skalicky says cybersecurity is the biggest challenge facing Stearns Bank right now, and it’s investing “significant resources” in managing and controlling cyber risk. The bank is also analyzing the potential impact of interest-rate increases on existing and prospective borrowers.

But it’s not going it alone. Regulation can sometimes feel like a dirty word in this industry, but true to his tendency to take the road less traveled, Skalicky has a different take on the matter.

“Our regulators [provide] vital checks and balance for our industry,” he says. “They help keep banks safe and sound and customer protections preserved. While we may disagree with them from time to time, the rules are intended to preserve and protect the bank.” He prefers to treat compliance as a chance to “learn from the experience of a wide range of banks.”

So while Stearns Bank may have become one of the best-performing community banks in the country through creativity and a willingness to break the mold, all those big ideas rest on a solid—one might even say conservative—foundation.

“Just as we like to see borrowers with savings tucked away for a rainy day … maintaining a strong capital reserve has been a high priority for Stearns Bank over the years,” Skalicky says. “Our strong capital base has been the foundation from which we have been able to achieve such high performance year after year.”

Xenith Bank
Richmond, Va.

Assets: $3.27 billion
3yr average ROA: 2.95%

3 facts about… Xenith Bank

  • It’s big in Virginia. Xenith Bank is the fifth largest community bank by deposits in the state.
  • It recently went through a merger. In July 2016, Xenith Bankshares, Inc. and Hampton Roads Bankshares Inc. joined forces to better serve customers in their target markets. The bank now has 42 full-service branches in its markets on the East Coast and two loan production offices.
  • It’s got community spirit. Xenith Bank’s Pathway Partners’ Community Service Program provides grants and other assistance to low- and moderate-income families in Maryland, North Carolina and Virginia.
    —Sara Schlueter

First Community Bank
Santa Rosa, Calif.

Assets: $1.16 billion
3yr average ROA: 2.45%

First Community Bank: Winning in wine country

Given its headquarters is in Sonoma County—the epicenter of California’s wine industry—it probably comes as no surprise that First Community Bank’s client list features a number of vineyards and breweries. But if you’re tempted to pigeonhole this $1.6 billion-asset community bank, think again.

As an SBA lending specialist, First Community Bank counts everything from safari parks and service stations to microgreen producers and transplant transporters among its small-business clients. It’s a natural focus for the 13-year-old bank: The board of directors is formed entirely of Sonoma County business leaders, operating in fields including semiconductors, freight trains, Alzheimer’s care communities and agricultural credit.

The bank’s top executive is Deborah A. Meekins, president and CEO, who joined First Community Bank in August 2012. She brought with her more than three decades of banking experience: As vice president and CEO of Sonoma National Bank, she helped grow that bank’s assets to $1.3 billion before it was acquired by Sterling Savings Bank in 2007. In 2006, U.S. Banker Magazine named her one of its “25 Women to Watch,” and North Bay Biz Magazine readers voted her “Best Business Community Leader” in 2007.

First Community Bank, which also offers personal banking services, puts employee satisfaction at the heart of its mission. It supports volunteer hours for staff at its seven branches, and it’s been featured in the North Bay Business Journal’s “Best Places to Work in the North Bay” list every year since the bank was founded.