Revealed: ICBA’s top-performing community banks

Our annual coast-to-coast roster of high achievers is here! Read on to see the 75 community banks that made the cut, and hear from nine we’ve highlighted for their consistent high performance and innovative strategies.

By Ed Avis

How we compiled the rankings

ICBA compiled this year’s rankings with the aim of recognizing community banks that are consistent high performers. Using FDIC data, we took into account return-on-assets (ROA) figures from 2015, 2016 and 2017, with 2017 carrying the most weight. We then divided the community banks into three broad segments based on asset size and ranked each segment based on our three-year weighted average ROA.

Less than $300 million

#14 State Bank of Wheaton

Wheaton, Minn.
Assets: $82 million
3yr average ROA: 2.89%

3 facts about State Bank of Wheaton

It has 19th-century roots: The bank was chartered on June 9, 1899.

It has grown steadily since then. The bank had about $500,000 in assets in 1937; $2.7 million in 1945; $7 million in 1966; and $82 million today.

It encourages new customers by offering a “switch kit” on its website. The kit includes a customizable letter to close existing bank accounts and transfer funds to State Bank of Wheaton.

Success with complexity

#3 Bank of Montana

Missoula, Mont.
Assets: $83 million
3yr average ROA: 4.58%

Many banks avoid complex loans because of the time and work involved. For Bank of Montana in Missoula, complex loans are a valuable niche.

“We’re typically working with major fixed-asset expansions, so our customers can really benefit from getting the terms they need, such as a longer fixed-term rate or another nuance that is critical to them,” explains Tom Swenson, CEO of the $83 million-asset community bank. “We have an expertise in combining various government-enhanced loan programs to meet our customers’ needs.”

One recent example is a company that was seeking a new headquarters location that would create several hundred jobs in its community. Bank of Montana helped with site selection so the company could take advantage of tax credits and tax increment financing. Then the bank created a package of loans to finance the balance of the project at an interest rate of less than 3 percent.

“We literally saved them millions of dollars,” Swenson says. “We worked with them each step of the way, looking for pitfalls and helping them take advantage of various programs.”

On average these loans take three years to close, Swenson says. Bank of Montana is on the verge of closing one that’s been in the works for a decade. Since few banks that worry about quarterly results would be interested in these kinds of loans, many clients arrive at Bank of Montana through referrals from other banks.

Sometimes, those referring banks also become partners. Regularly involving other financial institutions in its lending has been key in Bank of Montana’s success, Swenson says.

“We have developed a skill set in including other people’s money while delivering these loans,” he says, “so we’re able to close significantly higher-value loans than we could otherwise.”

#19 Almena State Bank

Almena, Kan.
Assets: $103 million
3yr average ROA: 2.66%

Agricultural lending … and more

Agricultural lending is vital to many community banks serving rural areas, but about five years ago, the leaders of Almena State Bank in Kansas decided they couldn’t rely on that sector alone to fuel growth.

“What drives our bank’s success is that we diversified beyond agricultural lending,” explains Shad Chandler, CEO of the $103 million-asset bank. “We still do quite a bit of agricultural lending, but unlike most banks in western Kansas, we also have a strong commercial real estate and commercial loan department.”

Chandler explains that local farmers and ranchers can choose from five banks and Farm Credit Services of America for their agricultural lending needs. But manufacturers and hospitality business owners have fewer options. To tap that market and build Almena State Bank’s commercial lending portfolio, Chandler exhibited at several trade shows and visited business owners, including some outside of his home market.

“We got a good response, and now it’s all word of mouth,” he says. “Hotels and motels, mostly in smaller markets, are our biggest area.”

Another source of clients is other banks that don’t want to handle the paperwork involved in SBA lending.

“If they have clients that don’t fit in their basic model, they say, ‘You should look at SBA loans, and here’s a bank that specializes in that,’” Chandler says. “We get a tremendous amount of business that way.”

$300 million to $1 billion

3 questions for James Beckwith, president and CEO of Five Star Bank

#19 Five Star Bank

Rocklin, Calif.
Assets: $973 million
3yr average ROA: 2.22%

Your website touts “purpose-driven banking.” What does that mean?
Purpose-driven banking reflects our commitment to community stewardship and our support of economic development in our region. We exist because of our customers. We also exist to actively engage with our community, which includes support of local nonprofits, from public programming to the arts to education. An example of educational support is our sponsorship of Sacramento State’s Business Honors Program, which is an eight-year commitment. We also support Cristo Rey Sacramento High School.

What really makes the bank tick?
Five Star Bank has a corporate culture of high accountability, which informs everything we do. We are recognized and respected for this commitment, and continue to guide local entrepreneurs and thought leaders in agriculture, the faith community, technology, manufacturing and more.

What are your key lending areas?
We focus on providing services to entrepreneurs and are always looking to serve new markets. Currently, we are seeing growth in SBA services and are postured to work with start-up and tech companies leaving the Silicon Valley for the Capital Region [the Sacramento metro area]. We are known for connecting investors with entrepreneurs, and have robust relationships with our venture capital community.

30 seconds with Jay S. Harris, president of Yellowstone Bank

#4 Yellowstone Bank

Laurel, Mont.
Assets: $723 million
3yr average ROA: 2.78%

Yellowstone Bank was founded in 1907 by B.M. Harris, and the Harris family still owns and operates the institution. Today, it has eight locations, most in south-central Montana. President Jay S. Harris says solid customer relationships fuel the community bank’s success.

What makes Yellowstone Bank successful?
Our bankers develop a level of trust and friendship with our customers that usually earns us most of their business over time. We have the ability to make quick and flexible decisions, taking our customers’ unique circumstances into account.

What are some key ratios you focus on?
We are currently about 100 percent loans to deposits, which results in a margin position that is slightly above our peers. And we try hard to maintain an efficiency ratio of around 40 percent.

Focused on efficiency

#9 First National Bank
of Las Animas

Las Animas, Colo.
Assets: $339 million
3yr average ROA: 2.37%

A lean operation and owners on the executive team are two key reasons First National Bank of Las Animas has made it on to our list of top-performing community banks, according to Dale L. Leighty, the Colorado community bank’s CEO and chairman of the board.

“We are owned by our officer team, and they make the decisions for the bank,” says Leighty, who was also chairman of ICBA in 2004–05. “The people who are charged with making the bank run profitably are doing it for themselves and not just outside owners. I think that’s very important.”

Leighty also walks in the shoes of his customers: He owns and operates a wheat and cattle farm, and agricultural lending has played a significant role in FNB Las Animas’ portfolio since the bank was founded in 1901. Some of the community bank’s other executives are farmers as well.

“That helps us feel the pain and understand the hands-on aspect of agriculture,” Leighty says.

Careful marshaling of the bank’s resources, however, may be the most important factor in FNB Las Animas’ success. The $339 million-asset community bank operates six locations with just 70 employees. The bank doesn’t spend more than it needs to, Leighty says.

“We don’t have much occupancy expense, we don’t focus on high-dollar facilities and we don’t have a big marketing budget,” he explains. “We run a pretty lean operation. We have a strong efficiency ratio and we manage a consistent and solid net interest margin.”

Ed Avis is a writer in Illinois.

More than $1 billion

By Susan Thomas Springer

Trucking along

#6 Crestmark Bank

Troy, Mich.
Assets: $1.2 billion
3yr average ROA: 2.34%

Crestmark Bank, a $1.2 billion-asset community bank headquartered in Troy, Mich., plays in niches where the big banks don’t. In 2007, it entered the underserved transportation industry by acquiring a $7 million transportation financing company—and its expertise. Today, that business has grown to $100 million, financing more than 500 trucking companies across the U.S. that haul loads for more than 10,000 clients. This segment has upfront costs, including fuel, insurance and payroll, yet an invoice may not be paid for 30 or 45 days. So, Crestmark offers factoring to trucking companies and other small businesses to ease cash flow problems. We spoke to president and COO Mick Goik.

How do customers benefit from your trucking segment expertise?
The biggest risk is whether who they’re hauling loads for will actually pay. We offer the ability for clients to credit-verify potential clients.

What are your plans to grow this sector?
Solve more of the financial needs for these trucking companies and build relationships. The bulk of our customers are smaller, with 20 or fewer trucks. I’d like to see our balance sheet grow through being a value-added partner.

Two ways NexBank boosts its local economy

#8 NexBank SSB

Dallas, Texas
Assets: $8.4 billion
3yr average ROA: 2.07%

1. Homeownership. NexBank SSB, based in Dallas, is boosting homeownership where rates are low. An affordable housing loan program, offered through Dallas Area Habitat for Humanity and Dallas Neighborhood Homes, gives low- to moderate-income borrowers with limited access to mortgages the opportunity to own a home. NexBank provides a $30 million line of credit and nearly $6 million in loans to qualified borrowers in southern Dallas. The $8.4 billion-asset community bank also covers all title fees for closings and up to $2,000 in closing costs per loan.

“We’ve focused on investing in community development activities that create economic opportunities for residents and building partnerships that support homeownership, financial literacy and child care services,” says John Holt, NexBank president and CEO.

2. Economic development. NexBank was presenting sponsor of the first TREC (The Real Estate Council) Shark Tank: GrowSouth event, modeled after the hit TV show. Three teams pitched real estate projects affecting southern Dallas to a panel of local real estate investors. NexBank worked with local businesses, professional organizations and financial services companies to support innovative ideas dedicated to the long-term economic development of southern Dallas. NexBank also provided a $2 million line of credit to support TREC’s Community Fund’s commercial real estate projects, which benefit low-income families and communities in Dallas and Collin counties.

Community-focused culture

#5 Choice Financial Group

Fargo, N.D.
Assets: $1.26 billion
3yr average ROA: 2.35%

Choice Financial Group is known as a commercial ag bank, but its passion for community service really makes it shine. Last year, the $1.26 billion-asset bank contributed 6,549 volunteer hours. As part of its PeopleFirst initiative, bankers enter community success stories in a friendly internal competition where three winners are highlighted on social media each month. In 2017, there were almost 2,000 nominations.

CEO Brian L. Johnson considers good corporate citizenship one of the bank’s values. “It’s an essential part of who we are, so we keep it top of mind,” he says. “It’s our priority to better the places we live and improve the lives of our customers, employees, communities and shareholders.”

When Grand Forks, N.D., needed a community wellness center, Choice stepped up as the $2.75 million naming sponsor and partnered with others to privately fund a $30 million facility. Choice Health & Fitness opened in 2012, offering health care services and education, diabetes wellness, fitness and family recreation.

In Walhalla, N.D., population 960, Choice and other community partners saved a popular ski lodge whose future was uncertain due to a death in the family that owns the business. Today, Frost Fire Ski & Snowboard Area offers winter skiing and tubing, and summer outdoor musicals.

“It’s good to be a strong, healthy financial organization, because those efforts aren’t just a one-time thing,” Johnson says. “If your financial wealth performances continue, you can be generous year after year.”

Susan Thomas Springer is a writer in Oregon.