Research & Analysis

188-year-old Mass. bank tops 2021 large community bank rankings

By Zain Tariq and Zuhaib Gull, Market Intelligence

Founded in 1834, Hingham, Mass.-based Hingham Institution for Savings took the gold in S&P Global Market Intelligence's 2021 large U.S. community bank ranking.

About this Analysis

To compile this ranking, S&P Global Market Intelligence calculated scores for each company based on six metrics: pretax return on tangible common equity; efficiency ratio; operating revenue growth; net charge-offs to average loans and leases net of Paycheck Protection Program loans ratio; non performing assets and loans 90 days or more past due as a percentage of total assets, net of PPP loans; and leverage ratio. Each company's standard deviation from the industry mean was calculated for every ranking metric, weighted, then combined to derive a performance score. To help normalize the data and mitigate the impact of outliers, caps and floors were applied for each metric.

Criteria for the ranking included a gross loans and leases to total assets ratio, net of PPP loans, of at least 25% with no more than half of those loans in credit cards, a leverage ratio of at least 5%, no active severe enforcement action, a result other than "substantial noncompliance" or "needs to improve" in the bank's most recent CRA exam, a yield on loans and leases of no more than three times the industry median of 5.05%, and no more than half of the entity's revenue coming from nontraditional banking activities. Additionally, industrial banks, companies with a bankers' bank certification, and banks with parent companies above $10 billion in total assets, adjusted for the exclusion of PPP loans, were omitted.

Based on the above criteria, 191 top-tier banks and thrifts were eligible for ranking. Hingham outperformed the top 50 median in all six of the metrics analyzed, and its 20.82% efficiency ratio was the lowest efficiency ratio among all 191 banks eligible for the ranking.

The thrift crossed $3 billion in assets during the third quarter of 2021, ending the year with $3.43 billion in total assets, up 20.1% from the end of 2020.

Just shy of $10 billion in assets, Fargo, N.D.-based State Bankshares Inc. took the No. 2 spot, helped by its 39.87% return on average tangible common equity and 43.2% operating revenue growth in 2021. The bank operates 16 branches in Minnesota, nine in North Dakota and three in Arizona.

State Bankshares has almost doubled in size over the last five years. Total loans and leases at the company increased 15.5% in 2021 as real estate loans grew by $1.10 billion.

Fort Lee, N.J.-based Cross River Bank rode a multibillion surge in Paycheck Protection Program loans to take the No. 3 spot. At the end of the year, the bank had $5.28 billion in PPP loans, second to only to the country's largest bank, JPMorgan Chase & Co. Cross

River reported both the highest return on average tangible common equity, 86.22%, and operating revenue growth, 144.6%, among the top 50 large community banks.

However, it should be noted that Cross River, along with a number of other online PPP lenders, has come under scrutiny for the prevalence of fraudulent loans made by the bank.

California placed 10 banks in the top 50 in 2021, more than any other state, followed by Texas with six.

This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.