America’s Best And Worst Banks

We turned to Charlottesville, Va., research firm SNL for data to gauge the health of the 100 largest banks and thrifts. SNL supplied us with numbers for eight measures of financial health: return on average equity; net interest margin; nonperforming loans (NPLs)as a percentage of loans; nonperforming assets as percentage of assets; reserves as a percentage of NPLs; two capital ratios (Tier 1 and risk-based); and leverage ratio. Forbes ranked the banks on each metric and averaged the individual ranks to determine an overall ranking of the best and worst banks.

The Best Banks:

No. 1 Bank of Hawaii

Headquarters: Honolulu, Hawaii
Assets: $12.7 billion
Price/Book: 2.2
NPLs/Loans: 0.9%
Reserves/NPLs: 296%

The stock of our top-rated bank trades for 2.2 times its book value, which is the second-highest ratio among the 100 largest banks by assets.

No. 2 East West Bancorp

Headquarters: Pasadena, Calif.
Assets: $20.4 billion
Price/Book: 1.4
NPLs/Loans: 1.3%
Reserves/NPLs: 136%

East West Bank is the largest bank in the U.S. focused on serving the Asian-American community. Assets have increased 64% over the past year.

No. 3 Prosperity Bancshares

Headquarters: Houston, Texas
Assets: $9.2 billion
Price/Book: 1.3
NPLs/Loans: 0.3%
Reserves/NPLs: 552%

Prosperity’s nonperforming loans as a percent of total loans are the lowest of any big bank.

No. 4 First Citizens BancShares

Headquarters: Raleigh, N.C.
Assets: $21 billion
Price/Book: 1.1
NPLs/Loans: 1.6%
Reserves/NPLs: 97%

First Citizens’ stock is the cheapest of our best banks at 1.1 times its book value. Its 5% net interest margin was fifth-best among the biggest banks.

No. 5 SVB Financial Group

Headquarters: Santa Clara, Calif.
Assets: $15.7 billion
Price/Book: 1.7
NPLs/Loans: 0.9%
Reserves/NPLs: 165%

Based in Silicon Valley, SVB focuses its financial services on the technology, life science, venture capital and wine industries.

No. 6 IberiaBank

Headquarters: Lafayette, La.
Assets: $10.6 billion
Price/Book: 1.2
NPLs/Loans: 0.8%
Reserves/NPLs: 277%

Iberia’s return on average assets is 12.6% over the past 12 months, seventh-best among the 100 biggest banks.

No. 7 Community Bank System

Headquarters: DeWitt, N.Y.
Assets: $5.5 billion
Price/Book: 1.4
NPLs/Loans: 0.6%
Reserves/NPLs: 220%

Community is the smallest of our best banks, and its nonperforming loans and assets are among the lowest of any bank.

No. 8 Commerce Bancshares

Headquarters: Kansas City, Mo.
Assets: $18.8 billion
Price/Book: 1.7
NPLs/Loans: 1.3%
Reserves/NPLs: 155%

Commerce traces its roots back to 1865 and today operates in five states. In 1984 it introduced the first card that combined a credit card and ATM card.

No. 9 Signature Bank

Headquarters: New York, N.Y.
Assets: $10.9 billion
Price/Book: 2.1
NPLs/Loans: 0.9%
Reserves/NPLs: 144%

Signature has low levels of nonperforming assets and loans on its books. The stock is up 51% over the past year.

No. 10 UMB Financial Corp.

Headquarters: Kansas City, Mo.
Assets: $11.3 billion
Price/Book: 1.5
NPLs/Loans: 0.6%
Reserves/NPLs: 244%

The bank’s reserves as a percentage of its nonperforming loans are fourth-best among the 100 largest banks.

America’s Worst Banks:

No. 91 Whitney Holding

Headquarters: New Orleans, La.
Assets: $11.5 billion
Price/Book: 0.8
NPLs/Loans: 5.9%
Reserves/NPLs: 49%

The weak Florida real estate market has hurt Whitney, as its nonperforming assets and loans are among the highest in the U.S.

No. 92 Flagstar Bancorp

Headquarters: Troy, Mich.
Assets: $13.8 billion
Price/Book: 0.2
NPLs/Loans: 7.5%
Reserves/NPLs: 47%

Flagstar’s stock has taken it on the chin, down 76% over the past 12 months.

No. 93 Synovus Financial

Headquarters: Columbus, Ga.
Assets: $31 billion
Price/Book: 0.8
NPLs/Loans: 5.9%
Reserves/NPLs: 61%

Synovus announced in March that the SEC was conducting an “informal inquiry” into possible violations of federal securities laws.

No. 94 Marshall & Ilsley

Headquarters: Milwaukee, Wisc.
Assets: $52 billion
Price/Book: 0.5
NPLs/Loans: 4.0%
Reserves/NPLs: 86%

Marshall & Ilsley is the 20th-largest bank in the U.S., but its return on average equity over the past 12 months has been the worst of those banks. Last week its board agreed for the bank to be acquired by Bank of Montreal for $4.1 billion.

No. 95 Sterling Financial

Headquarters: Spokane, Wash.
Assets: $10 billion
Price/Book: 0.2
NPLs/Loans: 12.4%
Reserves/NPLs: 32%

Sterling has reported huge losses over the past two years, resulting in the worst return on average equity among the 100 largest banks.

No. 96 PrivateBancorp

Headquarters: Chicago, Ill.
Assets: $12.6 billion
Price/Book: 1.0
NPLs/Loans: 4.2%
Reserves/NPLs: 60%

The stock has bounced back this year, up 63% after falling 72% in 2009, when bad loan provisions soared. The bank ranked in the bottom 40% of each of the eight metrics we considered.

No. 97 Doral Financial

Headquarters: San Juan, Puerto Rico
Assets: $9.1 billion
Price/Book: 0.3
NPLs/Loans: 12.5%
Reserves/NPLs: 16%

Doral’s reserves as a percentage of nonperforming loans are the second-worst of the biggest banks.

No. 98 Pacific Capital Bancorp

Headquarters: Santa Barbara, Calif.
Assets: $6.3 billion
Price/Book: 1.4
NPLs/Loans: 13.9%
Reserves/NPLs: 0%

The company announced a $500 million investment in August that dropped reserves (allowance for loan and lease losses) to $55,000 from $277 million in the second quarter.

No. 99 First BanCorp

Headquarters: Santurce, Puerto Rico
Assets: $16.7 billion
Price/Book: 0.1
NPLs/Loans: 12.7%
Reserves/NPLs: 38%

Wall Street is not a fan, with First BanCorp’s stock price down 84% during the past year.

No. 100 Wilmington Trust

Headquarters: Wilmington, Del.
Assets: $10.5 billion
Price/Book: 0.5
NPLs/Loans: 12.4%
Reserves/NPLs: 50%

Nonperforming assets as a percentage of total assets were 9.9% in the third quarter, the worst of any big bank. Its Tier 1 risk-based capital ratio of 9.2% is also at the bottom.