ABA Banking Journal - June 2008 - (Page 30)

TOPCOMMUNITYBANKS 1. Gains from strategic restructuring In 2007, three of the four top-ranked institutions benefited from significant one-time gains that, on average, contributed 84% of noninterest income reported by these banks. In all three cases, the transaction allowed the seller to exit either a market or a line of business and to realign its strategy. Some of these transactions were small: for example, the top performing S-corp with total assets under $100 million, Lone Star State Bank of Lone Star, Tex., sold one branch in Pittsburg, Tex., to another bank headquartered in that state. At banks and thrifts with total assets of under $100 million, smaller restructuring initiatives such as this had as significant an impact on net income as the sale of an entire loan portfolio or line of business, two strategies also used by top performers to generate one-time gains in 2007. In fact, these two types of transactions drove the performance of many among the pool of institutions with total assets of between $100 million to $3 billion. Seattle Savings Bank—appearing for the second year in a row as our top performing non- S corp with assets between $100 million and $3 billion—closed the sale of its reverse mortgage business to Bank of America in June 2007. Seattle Savings Bank netted a $91.2 million gain on the sale and a $52.9 million gain on the sale of loans (a portion of which were the loans in the bank’s reverse mortgage portfolio), doubling net income compared to 2006 levels. At 97.18%, Seattle Savings had the highest ROAE among non-S institutions. The average ROAE among the top 25 non-S institutions over $100 million was 27.51%, pulled up by Seattle Savings, compared to an average of 7.02% among all non-S institutions of this size. As improbable as it may seem, the top performing Subchapter S corporation with total assets between $100 million and $3 billion managed to post an ROAE for full-year 2007 that was even higher than that of Seattle Savings Bank. Marshall Bankfirst Corp., Minneapolis, reported an ROAE of 123.53%, moving up from 40th place in 2006. Marshall Bankfirst benefited from the sale of its prepaid card business to Bancorp Inc., Wilmington, Del., in July 2007. As a result, total non- interest income increased from $31.3 million in 2006 to $82.5 million in 2007. 2. Limited residential RE lending Banks with less than $3 billion in assets increased their focus on commercial and construction lending over the past few years as larger institutions captured greater shares of the residential mortgage and consumer loan markets. In some cases, smaller institutions responded by shifting to a pure commercial focus. For example, at Excel National Bank, Beverly Hills, Calif. (#10 among non-S corps with less than $100 million), commercial real estate and commercial and industrial loans comprised 78% of the loan portfolio. A similar strategy was also used by the top-ranked non-S bank under $100 million—Farmers Bank, Hamburg, Ark. CRE and C&I loans together made up approximately 51% of its loan portfolio. The bank also benefited from a $4.4 million payment from the U.S. Department of Agriculture relating to a disputed loan guarantee. Top performing institutions were also more likely to hold a large percentage of S-corp banks and thrifts greater than $100 million in assets 2008 2007 rank rank Institution Total assets (000) 2007 ROAE 2007 ROAA Asset growth rate Loans/ deposits Noninterest Efficiency inc/total ratio NPLs/tot rev (FTE) loans Leverage ratio 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 40 9 4 2 24 13 11 15 37 29 31 6 14 35 19 28 10 N/A 20 32 7 8 303 36 38 Marshall Bankfirst Corp., Minneapolis, MN, bhc United National Corp., Sioux Falls, SD, bhc Charter Bank, Corpus Christi, TX, bank Woodforest Financial Grp, The Woodlands, TX, bhc America West Bank, Layton, UT, bank WNB Bancshares, Odessa, TX, bhc Brighton Bank, Salt Lake City, UT, bank State Bank of Texas, Irving, TX, bank Valley Bank of Commerce, Roswell, NM, bank United Bancorp. of Wyoming, Jackson, WY, bhc Bank of the Southwest, Roswell, NM, bank First National Bank, Picayune, MS, bank First National Bank, Fabens, TX, bank First National Bank, Artesia, NM, bank First National Bank, Burleson, TX, bank First Bank & Trust Co., Wagoner, OK, bank Eastern Savings Bank, Hunt Valley, MD, savings bank Ironhorse Financial Group, Muskogee, OK, bhc Blue Ridge Savings Bank, Asheville, NC, savings bank Citizens Bank, Las Cruces, NM, bank Guaranty Development Co., Livingston, MT, bhc Gulf Coast Bank & Trust Co., New Orleans, LA, bank South Lafourche Bank & Trust Co., Larose, LA, bank Bank of Bloomsdale, Bloomsdale, MO, bank Texas Bank, Brownwood, TX, bank Source: SNL Financial LC Data as of Dec. 31, 2007 $536,501 1,492,440 155,409 2,526,114 270,992 770,737 150,614 477,797 111,345 1,697,872 139,357 223,615 240,068 532,388 150,444 193,819 1,117,603 740,822 299,812 325,849 482,005 785,833 112,205 157,735 229,105 123.53% 46.73 44.97 43.17 42.55 42.41 39.53 39.40 39.32 39.28 38.85 38.21 37.83 36.07 35.87 35.27 35.20 34.92 34.11 33.83 33.79 33.39 33.16 32.97 32.85 3.93% 21.91 2.62 2.17 3.66 2.26 4.74 5.68 3.19 2.37 3.37 3.14 3.10 2.46 2.53 3.36 4.93 2.10 3.31 2.61 1.88 2.18 2.57 2.56 3.25 -25.22% 3.28 17.48 12.44 46.14 3.50 -9.51 57.26 5.26 19.22 5.48 -1.76 8.84 11.16 6.40 15.62 14.00 15.31 0.29 1.51 2.13 18.88 4.41 -0.81 9.79 101.72% 232.23 61.29 72.99 102.91 84.00 76.71 151.88 51.94 86.21 103.11 90.18 66.94 82.02 43.58 91.70 108.23 85.78 105.24 74.86 116.09 86.94 102.86 71.98 83.82 80.50% 68.70 15.33 73.50 6.94 10.96 17.41 5.60 7.93 12.58 10.27 17.28 13.69 20.79 17.71 8.94 2.66 31.33 2.69 24.07 6.77 16.98 19.20 12.82 20.81 52.44% 43.40 54.74 81.30 36.04 51.65 44.09 18.87 41.67 43.91 57.62 43.59 44.37 56.26 52.17 37.52 38.97 61.98 31.16 52.91 58.90 69.01 55.70 39.16 53.35 21.17% 0.12 0.13 0.27 4.00 0.80 0.00 0.44 0.00 0.21 0.14 1.08 1.84 0.11 1.21 0.55 33.46 1.00 2.40 0.42 0.00 1.23 0.56 0.16 0.05 11.36% 49.63 5.85 6.74 9.14 7.93 12.29 12.39 7.71 7.34 8.83 8.49 7.73 7.42 7.90 9.69 11.76 8.37 10.01 7.73 8.15 7.00 8.37 7.95 9.75 30 JUNE 2008/ABA BANKING JOURNAL

Table of Contents Feed for the Digital Edition of ABA Banking Journal - June 2008

ABA Banking Journal - June 2008 Contents Editor’s Column Do Fee-based Services Have an Edge? Snapshot: Net Interest Margins Vary Sharply with Size 100th Anniversary: Then & Now Letters ABA Resources ABA Chairman’s Position "What? No Annual Surprise Bonus?" Pass the Aspirin Cover Story: Top Community Banks: How They Did... ...And How They Did It Charter Bank First East Side Savings Bank Mackinac Financial Corp. The Peoples Bank Managing the E-mail Monster In Brief Handling PEPs in the Age of "L'affaire Spitzer" Mailbox Banker’s Mart To Advertise/Index of Advertisers The Economy

ABA Banking Journal - June 2008

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