RankingBanking 24 Digital (1) - Flipbook - Page 25
23
buck,” says Damon DelMonte, a managing direc-
The small banks that ranked highly in Ranking-
tor at Keefe, Bruyette & Woods, who covers com-
Banking in the last few years exhibit discipline and
munity banks.
strong balance sheet management, while dominat-
Year after year, smaller banks dominate the top
25 list in Bank Director’s annual RankingBanking
ing markets and enjoying loyal customers, which
protects their net interest margin.
study, and this year has been no exception. Just six
Wilson Bank & Trust — the banking subsidiary
of the 25 best banks exceed $10 billion in assets,
of Wilson Bank Holding Co. — might be the quint-
and of those only one, East West Bancorp, is above
essential community bank. The Lebanon, Tennes-
the $50 billion mark. The median asset size for
see-based bank’s main branch and operations cen-
this year’s ranking of top performers, sponsored
ter are located right off Main Street, just a stone’s
by Crowe, totals just $5.8 billion — much small-
throw from city hall. Attend a community event
er than more than $4 trillion JPMorgan Chase &
or local football game, and you’re likely to see a
Co., the biggest bank in the country, which ranked
Wilson Bank banner. Throughout the summer, staff
128th overall and ninth in its asset class of banks
hand out popsicles at county state fairs in middle
over $50 billion. Last year, the median asset size
Tennessee.
for the top 25 banks was $4.3 billion.
CEO John McDearman III calls Lebanon home;
A deeper dive into the data comprising the
it’s where he grew up. He originally planned to be
annual analysis — two profitability metrics, one
a dentist, he tells me, but banking was in his blood.
asset quality and one capital metric— indicates
“I watched my dad. I grew up seeing him as a lo-
consistent outperformance by small banks. Take
cal banker and seeing the impact he could make
ROAE, for example. Over the past three years, the
in the community,” he says. In 1994, he started
top 30 banks in the below $5 billion asset category
working at NationsBank, eventually managing the
reported the highest ROAE every year; in 2023,
bank’s Chattanooga office. He loved Chattanooga,
that was 14.82%. In contrast, the top banks in the
but shortly after NationsBank merged to create
largest asset group have consistently reported the
Bank of America Corp. in 1998, he got a call. Wil-
lowest ROAE — 12.24% in 2023.
son Bank wanted McDearman — who had lost his
The $10 billion mark isn’t the only explana-
father to cancer — to come home. “I felt like God
tion for outperformance by small banks. Some
was opening a door,” he says. He became CEO in
of the worst performers in this ranking, in fact,
January 2020.
are also below $10 billion. Small banks still face
Lebanon is located just half an hour
high costs. They compete with the broader market
or so from Nashville in Wilson County,
for talent, and they’re investing in technology to
where the population has boomed.
keep pace with the industry. Funding costs can be
When Wilson Bank was founded in
a particular challenge. Smaller banks tend to pay
1987, the county had half the res-
higher rates to depositors than big banks do. In
idents it does today. In 2023, an
part, that’s because large banks can offer superior
estimated 164,000 called Wilson
liquidity services in the form of ATMs, technolog-
County home — an 11% increase
ical access and branch locations, so their custom-
in just three years, according to the
ers agree to accept lower rates, according to an
U.S. Census Bureau, outpacing oth-
October 2023 working paper published by UCLA
er counties surrounding Nashville. Wil-
Anderson Review.
son Bank holds 46% of the deposits in its
Therefore, small banks have disadvantages, too.
19 OF THE TOP 25
BANKS ARE UNDER
$10B
growing Wilson County home base, according to
IN ASSETS.
