December 18, 2021 / VOLUME NO. 188
Naming the Best Banks

Most of the best banks in the nation are names that won’t surprise any of our readers. In Bank Director’s 2022 RankingBanking report published this week and sponsored by Crowe, JPMorgan Chase & Co., SVB Financial Group, and Western Alliance Bancorp. top the list.

Those are the National Merit Scholars of banking. But some names in our latest ranking may be less familiar. Merchants Bancorp. in Carmel, Indiana, and FS Bancorp in Mountlake Terrace, Washington, are the tops for small regional and community banks, respectively. Merchants benefited from strong growth due to its focus on the booming mortgage sector. FS Bancorp’s financial performance was driven by a highly capable and focused leadership team that places a high value on culture. Meanwhile, Popular, the parent of Banco Popular de Puerto Rico and New York-based Popular Bank, emerged as a bright spot during difficult times, making it to No. 7 among the best regional banks in the country. 

Popular is profitable and has generated high shareholder returns, but it also excels in an area that we spend a lot of time thinking about here at Bank Director: governance. Popular got on our radar because we wanted to do more this year than just rank banks by profitability, which any banking publisher can do. We wanted to look at the qualities that make banks great. 

Our Vice President of Research, Emily McCormick, started by identifying the top 10 publicly traded banks in each asset class based on profitability: return on average assets and return on average equity. Profitability is certainly important, and we gave those metrics a double weight in our scoring to recognize that. We also ranked those high performers based on five-year total shareholder return, because it reflects how shareholders fared, and year-over-year growth in pretax, pre-provision net revenue, because that reflects the bank’s earnings trajectory. We also ranked the high performers based on asset quality, as well as leadership, board excellence and innovation, because those qualities reflect the bank’s sustainability going forward. The study ranks the 50 best banks in the industry as a result.

For those more difficult to measure qualities, leadership and board excellence, we considered external ratings from Institutional Shareholder Services, to assess governance risk. We used Glassdoor and Indeed to consider employee feedback. We looked at proxy statements, bank websites and annual reports to determine the skill and experience level of board members and the leadership team, as well as diversity in terms of race and gender. To measure innovation, we looked at the bank’s strategic initiatives to transform in a digital age as well as expertise and annual technology spending. 
After reviewing hundreds of corporate documents and press releases, we feel confident this list measures the year’s best of the best among publicly traded banks. 

• Naomi Snyder is editor-in-chief at Bank Director
The 2022 RankingBanking study identifies the best banks in the U.S. based on metrics examining profitability, growth and shareholder value, as well as factors that drive performance, including leadership and innovation.

“The final list includes the biggest banks, as well as regional and community banks leveraging traditional operating models in robust markets. Many took advantage of the mortgage boom, and some leaned into the digital economy.”

• Emily McCormick, vice president of research for Bank Director
Technology can help community banks get back to what they do best.
Banks can use a board assessment and alignment to create strategies that position them for growth and prepare them for unexpected changes in the industry.
Competition for commercial loans has been heating up, and future success will require an enhanced digital experience.
Executives should reflect on what the future holds — and how to respond — based on continuing and emerging trends seen throughout 2021.