Our annual list of the year’s top-performing community banks boasts institutions that focus on efficiency and the personal service that builds strong, lasting relationships. Their success last year has set them up to ride out this year’s storm.
Less Than $300 Million
By William Atkinson
State Bank of Wheaton stays lean and green
Drew Donnelly, president and CEO of State Bank of Wheaton, attributes his bank’s success to a number of things.
“We specialize in ag lending,” he says. “Many of our ag borrowers are quite large, which helps us keep our loan-to-deposit ratio fairly high. We are also able to keep our net interest margin relatively strong and stable over the years, and our efficiency ratio very low.”
State Bank of Wheaton
Assets: $85 million
3-yr average ROA: 2.86%
In addition, State Bank of Wheaton doesn’t offer any compliance-intensive loan products, and the community bank maintains a high capital-to-asset ratio. Another variable is its chief financial officer, who Donnelly says is very good at keeping overhead and other operating expenses down.
“He spends the bank’s money as if it were his own,” Donnelly says, noting that “we have a far reach, so we have no need to open any branches.”
State Bank of Wheaton’s plan for the future? Stay the course. “We just keep doing what we have been doing, tweaking it along the way,” Donnelly says. “It’s been working well for many years.”
“We just keep doing what we have been doing, tweaking it along the way. It’s been working well for many years.”
State Bank of Wheaton
Nitin Shah, chairman and CEO, Embassy National Bank
Q: How important are your customers to your success?
A: Our major key to success is knowing our customers and having long-term relationships with them, helping them during difficult times. As a result, [they] stay with us. Some … have been with us since I became CEO during the last financial crisis, during which time I helped them refinance and renovate their properties and businesses. I understood their problems with franchise issues and renovation like no one else did, because, even though we were in crisis, as a businessman myself, I knew that fundamentally they were strong and their character was strong. As a result, we are reaping the benefits of that.
Q: How do you learn what your customers need?
A: Besides having been a businessman myself before entering banking, our board consists of three businessmen out of six. We network a lot, stay active in the community and sponsor community events, and, as a result, we understand local businesses and what they need. We understand their strengths, as well as where they need help.
Embassy National Bank
Assets: $108 million
3-yr average ROA: 2.61%
Q: In what other ways do you help your customers?
A: In many ways, we see ourselves as business solution consultants, not just bankers. A lot of times, our customers need help, but they may not even realize that they do. We can help them understand if we think they might be making a mistake. For example, if they want money to engage in a renovation, we may let them know that the amount they are seeking will not be enough and we sometimes give them more money than they think they need to ensure that our collateral is adequately protected. We want to make sure they get the right amount of money, so they can do the job right.
3 minutes with …
Darrel Small, president and CEO, Town & Country Bank
What are your keys to success related to your ROA performance?
Our main keys to success have been watching our costs of funds and our margins. In addition, we do not get into consumer banking. We are a commercial bank. While we serve all customers on the deposit side, as far as lending and investments go, we focus on the commercial side. As such, this means we don’t have to focus on trying to compete with credit unions and other banks on rates on consumer lending.
“Our main keys to success have been watching our costs of funds and our margins.”
Town & Country Bank
Town & Country Bank
Assets: $185 million
3-yr average ROA: 2.98%
What else have you found effective to maintain efficiency?
We operate four branches, so it is very important for us to work hard to keep overhead costs low, including contracts and our costs of labor. We don’t have a lot of additional programs or bells and whistles. We really consider ourselves to be a traditional community bank. We have a few things that we offer beyond the basics, such as debit cards, lines of credit and mobile banking. However, again, we aren’t spending time looking for the new things or the latest business modules in banking. We simply focus on core banking. In sum, we focus on doing the basics very well.
$300 Million to $1 Billion
By Katie Kuehner-Hebert
4 facts about … First IC Bank
First IC Bank
Assets: $681 million
3-yr average ROA: 2.73%
- First IC Bank offers its banking services in Chinese and Korean to serve Asian customers who need Small Business Administration (SBA) loans, foreign investment loans, working capital lines of credit in business loans and other commercial products, as well as residential mortgages and personal loans.
- The community bank’s marketing efforts are tailored for its customer base. For example, in 2019, it ran a Chinese New Year promotion offering free wire transfers to China, South Korea or the U.S.
- First IC Bank has eight full-service branches, including five in Georgia, one in Texas, one in New York and one in New Jersey, and plans to open more. It also operates two loan production offices in Los Angeles and Seattle.
- First IC Bank could benefit from the growing number of Asian American entrepreneurs. Roughly 2 million U.S. businesses are owned by Asian Americans, according to the most recent U.S. Census Bureau Survey of Business Owners. In fact, between 2007 and 2012, the number of Asian American-owned U.S. businesses grew by 23.8%, far outpacing the 2% growth of all U.S. businesses.
3 minutes with …
Asif Dakri, vice chairman and CEO, Wallis Bank
What makes Wallis Bank successful?
Our whole team, including our executives, is always available to discuss questions or concerns that our customers may have. We do not believe in bankers’ hours. We understand that life continues outside of business hours and sometimes you have to be available to help out when the need arises.
What are some of your signature initiatives?
Through the SBA product offering, we are able to provide flexible lending solutions that enable our customers to focus on their business, as opposed to worrying about things such as when the next balloon payment is due.
Assets: $797 million
3-yr average ROA: 2.73%
Wallis 360 is our new and improved business online banking platform that scales from supporting small businesses with basic online banking features, all the way to full-blown treasury management for larger businesses. Card Safe is the bank’s branded mobile app that gives customers control over their debit cards. And Wallis Bank Mobile is our retail mobile banking app that has been updated to support mobile deposits and Zelle.
What’s the secret sauce to customer service?
You know your people are doing something right when your customers buy lunch for the 80-plus people in one of our locations as a thank you. For our customers, we strive to make sure that they are receiving an experience that will make them keep coming back.
“We strive to make sure [our customers] are receiving an experience that will make them keep coming back.”
—Asif Dakri, Wallis Bank
Jay S. Harris, president, Yellowstone Bank
Q: As a fifth-generation, family-owned bank that’s over a century old, who do you serve?
A: We’re primarily a small business bank, but we also serve a lot of ranchers and farmers. We make a lot of real estate loans and ag loans, and we also offer home mortgages. Small business customers are doing well, because our communities are doing well. Residential real estate has been strong, and home construction has been particularly strong. This has helped not only homebuilders but also other businesses.
We have some great multigenerational farmers and ranchers. They are very good producers, but they’re not immune to commodity prices, and it hasn’t been the easiest time the last couple of years. But when any of our customers experience challenges, we do everything we can do to help them. We can take a customized approach, as a solution for one ranch, farm or business may not be a good solution for another one. We can also make a decision within days or even within hours.
Q: What is your secret to outperforming banks with the same attributes?
A: We’re very efficient, typically in the 40% range. We have a flat organization without a lot of excess middle management. By the same token, we have enough experienced staff to take care of our customers. We also [have been doing] our own data processing for close to 40 years. We buy software from [Jack Henry & Associates], but we do our own processing on our computers and servers, which is something most community banks outsource. This saves us money.
Assets: $790 million
3-yr average ROA: 3.01%
Q: What else makes your bank unique?
A: We have a robust and dynamic credit culture, which allows us to make good decisions and limit losses. We also have a large [number] of long-term employees, some who have been here for 30 or even 40 years. They are high-quality, skilled employees who can do many different types of tasks.
We know there are a lot of places to work out there, so we try to show our appreciation not just with competitive compensation and benefits, but in a variety of [other] ways.
More than $1 Billion
By Kelly Pike
3 minutes with …
Vito Pantilione, president and CEO, Parke Bank
How do you top a year of record earnings? If you’re at Parke Bank, you do it with an even better year. Strong loan demand from one of the community bank’s largest group of customers—Chinese American businesses—was one factor in its earnings of nearly $30 million, up 22% from $24.4 million in 2018. Despite the U.S.-China trade war and the beginning of the COVID-19 pandemic, loan demand among the bank’s Asian American clients was robust, propelling Parke Bank to loan growth of 14.4% overall. “[That segment is] less than half of the portfolio, but it’s a big half,” says Vito Pantilione, president and CEO.
The community bank has captured much of this market by catering to its customers’ needs. Pantilione, the former president of a Chinese bank in Philadelphia, understands the cultural differences and hires staff who do, too. Among its employees are speakers of every Chinese dialect, making it possible to bank any Chinese customer who isn’t fluent in English.
Assets: $1.8 billion
3-yr average ROA: 2.56%
Parke Bank has also worked to educate customers about financial documentation and the loan process. Now, 60% of new loans in the Chinese community are from existing customers, Pantilione says.
The biggest challenge, whatever the market, is keeping up with deposits; Parke Bank is just outside Philadelphia, one of the most competitive deposit markets in the country. “It seems like we have spies in the boardroom,” Pantilione jokes. “We have a meeting on special interest rates and, as soon as we leave the board meeting, we find out somebody just came out with a higher interest rate.”
Though 2020 is turning out to be a very different year than 2019, Pantilione remains hopeful.
“The only thing I can say is hopefully we are very well structured to survive what comes at us,” he says. “We have a very strong capital position, very strong earnings and a very good asset quality position. We have a strong loan loss reserve. Certainly, all that can change in this environment, but all the boxes tell us we’ll be able to come out of this crisis strong.”
Cache Valley Bank: Towering above the competition
Cache Valley Bank is more than just the largest privately owned bank in Utah, with a strong ROA. It’s a community bank that knows how to make a statement that says “local,” strengthening its reputation with customers.
Cache Valley Bank
Assets: $1.3 billion
3-yr average ROA: 2.84%
The bank made headlines in 2019 when it transported the century-old Holley-Globe Grain and Milling Company elevator to be the centerpiece of its new branch building in Hyram, Utah. Once the project is completed, the tower, listed in the National Register of Historic Places, will be repurposed to include an observation deck and serve as a de facto museum.
More than a building, the architectural icon will serve three other purposes:
- It sends the message that the community bank understands farmers.
- It shows that the bank cares about preserving its community’s history.
- It’s practical. The tower gives a line of sight to make it easier to transfer data to Cache Valley Bank offices.
Royal Business Bank on a mission to grow
Since it went public in 2017, Royal Business Bank has more than doubled its size and is well on its way to reaching its goal of being a $5 billion-asset community bank.
Royal Business Bank
Assets: $2.9 billion
3-yr average ROA: 2.48%
With offices in Los Angeles, New York and Nevada, Royal Business Bank is working toward growth both organically and through acquisition. The community bank expanded into the Chicago market in January, acquiring another bank with the same focus of serving the Asian American market. It plans to open two branches in the area.
“We plan to supplement the lending products offered by [the acquired bank] with our mortgage, SBA 7(a), small C&I [commercial and industrial] and construction lending products,” said Alan Thian, chairman, president and CEO of RBB Bancorp, Royal Business Bank’s holding company, in a January earnings call. “We believe this expanded suite of product offerings will provide a superior banking experience for our customers, as well as [allow] us to win a greater share of their banking business.”
“We believe this expanded suite of product offerings will provide a superior banking experience for our customers.”
—Alan Thian, RBB Bancorp
How we compiled these rankings (revised in April 2021 before publishing the new 2021 methodology)
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 pre-tax return-on-asset (ROA) figures from the past three years, with the most recent year weighted at 3x, second most recent year at 2x and third most recent year at 1x. 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. A bank must have a rating of C or higher by Kroll Bond Ratings (formerly LACE) to be considered for ranking. Banks with 3x the industry average non-current loans to assets or net charge-offs plus OREO to assets were eliminated from consideration.
William Atkinson is a writer in Illinois. Katie Kuehner-Hebert is a writer in California. Kelly Pike is a writer in Virginia.