America’s Best Banks 2022
America’s largest banks joined the US economy in 2021, rebounding into a strong position after the upheaval and disruption of Covid-19, which continues to spread but with less disruption to daily life.
The end of the pandemic shutdowns aimed at slowing the spread of the virus served as a resilience test for the sector not seen since the Great Recession.
The pandemic and the federal government’s response set the stage for the current environment, in which the US has emerged from the fastest recession in US history and an exceptional economic recovery, not only with GDP growth of 5.7%, but also followed by 7% inflation CPI in December, the highest since 1982.
American banks have been at the forefront of this robust response to the pandemic, helping to provide forgivable loans to mom and pop businesses across the country through the Paycheck Protection Program. This federal response not only saved many Main Street businesses, but also allowed the damage to the banks to be limited to just four bank failures.
Click here for the full list of America’s Best Banks.
Mike Mayo, managing director and head of US large-cap bank research at Wells Fargo, said forbes that the best banks “acted as part of the solution during the pandemic, as opposed to part of the problem, as the industry did during the global financial crisis.” That track record, Mayo says, was the result of upgrades made over the past decade to improve capital, liquidity, technology and resilience.
As reflected in the rankings, Mayo sees a rosy picture for smaller banks, adding that main-street banking is seeing growth for the first time in the digital age. The increasing digitization of the banking sector should improve margins, especially for smaller main street banks.
“Main street banking is back because of the historical dry powder in terms of cash deposits and capital, the return on credit growth and likely higher interest rates,” Mayo says, adding that his team saw the best growth in main street banking in over three years forecast decades. Bank stocks have already outperformed on expectations of rising interest rates and improving net interest margins. Over the past year, the iShares US Regional Bank ETF has nearly doubled the return of the S&P 500 Index.
The more than 5,000 banks and thrifts in the United States that have survived the past few years are now poised to thrive as pent-up demand and a full reopening of the global economy progress.
Originally conceived after the 2008 financial crisis, forbes has worked with S&P Global Market Intelligence on its ranking of “America’s Best Banks” for 13 years. Taking into account financial data on the growth, quality and profitability of the top 100 publicly traded banks and thrift by asset, the metrics used to compile the rankings are based on the most recent regulatory filings as of September 30, 2021. While S&P provides this data, the rankings are made by forbes
Metrics considered to compile this list include: non-performing assets as a percentage of total assets; reserves as a percentage of non-performing assets; CET1 ratio, which compares a bank’s capital to its risk-weighted assets; risk-based capital ratio; return on the average tangible share capital; return on average assets; net interest margin; growth in operating income; and net charge-offs as a percentage of total loans. This list excluded banks where the top-level parent is not located in the United States
Home Bancshares, the bank holding company behind Centennial Bank, was the highest-rated bank in America, up four places from last year when it was fifth. The community bank’s parent company, based in Conway, Arkansas, was in the top 50 on every metric forbes Tracks, which are notable for their risk-based capital ratio of 19.6%, a CET1 ratio of 15.2%, an efficiency ratio of 40.2%, a net interest margin of 3.9% and a return on average asset of 1, It was surpassed by 9% in the top 10.
Smaller institutions again dominated at the top of the list, with just two banks in the top 40 with assets in excess of $100 billion.
Ontario, California-based CVB Financial, the parent company of Citizens Business Bank, ranked fourth on the list after being the best bank over the past two years. The rest of the top 10 included Little Rock, Arkansas-based bank OZK at #2, Irvine, California-based bank holding company Pacific Premier Bancorp at #3, Olney, Maryland-based Sandy Spring Bancorp at #5, Houston , Texas-based Prosperity Bancshares at #6, McLean, Virginia, Capital One Financial Corporation at #7, Kalispell, Montana, Glacier Bancorp at #8, Portsmouth, Virginia, TowneBank at #9, and Wheeling, West Virginia, WesBanco at #10.
Pacific Premier cited the booming economic recovery as the reason for its strength in 2021, citing increased commercial lending activity and credit demand, particularly commercial lending, as a key factor behind its strong 2021 numbers.
For Prosperity Bancshares, this realized upturn in business activity was coupled with a regional boom, with the Texas bank’s CEO David Zalman saying he expects Texas and Oklahoma to see outsized growth when they reopen, coupled with companies and individuals, who move to the region and move its preferred tax rates.
Glacier Bancorp’s strong year was fueled in part by a sizeable acquisition that brought in Altabancorp, the parent company of American Fork, Utah-based Alta Bank, which was the largest acquisition in the company’s history and earned more than $4 billion from the brought in Utah, the largest community bank in the country.
Nine of the top 10 banks have less than $37 billion in assets, with Capital One functioning as an outlier with more than $425 billion in its treasury. Capital One, which has specialized in credit cards since its inception as a credit card company in 1994, was also among the big climbers on the list, gaining 37 spots from its 44th spot last year. Capital One was the best bank when it the return on average tangible share capital, the return on average net worth and the net interest margin.
Another of the largest banks on the list, The Bank of New York Mellon Corporation, posted one of the biggest falls on the list, falling 58 places from 8th last year to 66th this year, with net interest income falling by 9% were a major cause. Year by year, according to the New York banking giant’s third-quarter 2021 earnings used for this list. BNY’s net interest income fell 12% year-on-year in 2021, which the bank attributed to low interest rates on interest-bearing assets.
The country’s largest bank, JPMorgan Chase & Co., and its assets of nearly $4 trillion, moved up three spots from 51st to 48th. CEO Jamie Dimon attributed the strong year to his company “benefiting from increased capital markets activity and a pick-up in lending activity… firm-wide” in comments on the bank’s fourth-quarter results.
Wells Fargo, a trillion-dollar bank, climbed one spot from last year to 97th from 98th a year ago and finally witnessed the expiry of a 2016 Consumer Financial Protection Bureau consent order excluding retail The company’s banking scandal resulted.
The other two trillion dollar banks fell down the rankings. Citigroup was 88th, down from 65th last year, and Bank of America was 91st after being 74th a year ago.