Community banks like CVB Financial thrive, while trillion-dollar giants like Wells Fargo slide.

An earlier version of this ranking said we used 10 factors to create this list. In fact, only nine factors were used this year. We apologize for any confusion.

Higher interest rates provided a healthy boost to banks’ balance sheets in 2022, but it wasn’t always an easy year to be a banker–particularly if you worked for one of America’s trillion-dollar-plus behemoths.

For the 14th year, Forbes is ranking the 100 largest (by assets) publicly-traded U.S. banks and thrifts, based on nine metrics measuring their credit quality and profitability. Topping the list for the third time in the last four years is CVB Financial, the parent company of $16.4 billion-in-assets Citizens Business Bank. Based in the Los Angeles suburb of Ontario, it has 35,000 customers and specializes in serving small and medium-sized businesses.

“We focus on primarily privately-owned, family-operated businesses. It’s really that great American success story that we want to bank,” says David Brager, who has worked for the bank for 20 years and took over as CEO in 2020. CVB’s net profit was up 11% last year and its network of just 60 branches makes it one of the most efficient banks in the nation.

Meanwhile, capital markets revenue dried up for large banks that had fewer deals to finance, and loan loss provision expenses piled up as consumers, with their pandemic stimulus cash running out, started to look stretched. U.S. banks cumulatively generated $260 billion in net income in the 12 months through September 30, 2022, a 6% decline from the previous year, according to data from the Federal Deposit Insurance Corp. Still, 96% of all FDIC-insured institutions were profitable, and small community banks around the country are thriving.

“It was a year of extremes, and that’s sort of what we’re expecting in the early going this year,” says Stephen Biggar, director of financial services research at Argus Research. “It was a much more wild swing in some of the revenue sources than you’re used to seeing.”

All four of the nation’s trillion-dollar banks are stuck on the bottom third of the list, with $1.9 trillion-in-assets Wells Fargo sliding from 97th to dead last at 100th. Its efficiency ratio, which divides operating expenses by total revenues, was the sixth-worst at 72.6%, compared to a median of 58.4%. (A lower ratio is better, of course.) Wells also ranked in the bottom quintile in seven of our other eight metrics, which include Common Equity Tier 1 (CET1) ratio, a test of a bank’s liquidity; net charge-offs as a percentage of total loans; and return on average tangible common equity. The rest of the factors the list measured were operating revenue growth, net interest margin, nonperforming assets as a percentage of total assets, reserves as a percentage of nonperforming assets and risk-based capital ratio.

S&P Global Market Intelligence provided the data as of last September 30, and the rankings are done solely by Forbes. (Banks that are subsidiaries of larger institutions were excluded, as were banks where the top-level parent is based outside the U.S.)

Click here to see the full list of America’s Best Banks.

Wells Fargo’s net profit in the 2022 calendar year fell 40% to $12.1 billion, hampered by its provision for a $1.7 billion civil penalty and $2 billion in restitution for 16 million consumers ordered by the Consumer Financial Protection Bureau. The sweeping order covered illegal fees and mishandling of auto loans, failures to grant mortgage modifications, and surprise overdraft fees on checking accounts. The bank has been plagued by criticism of its treatment of consumers since 2016, when its opening of millions of accounts–without customers’ consent–came to light. It said in a statement that it has “accelerated corrective actions and remediation since 2020,” eating into its profits.

JPMorgan Chase, America’s largest bank with $3.8 trillion in assets, fell from 48th last year to 70th. Its operating revenue growth of 2.0% through last September is down from 3.0% on last year’s list, slipping to 80th in the rankings. Its $37.7 billion in net income in the 2022 calendar year reflected a 22% decline from 2021, as its efficiency ratio was pressured by stagnant revenue growth and higher spending on compensation, technology and marketing. Meanwhile, Citigroup moved up slightly to No. 81 and Bank of America weighed in at 86, up from 91 last year.

Biggar notes that while smaller banks may get as much as 75% of their revenues from net interest income, at large banks it’s more of a 50/50 split between interest income and everything else. “Clearly the tailwind of interest rates rising had a much more favorable impact on your traditional regional bank than it did on the global banks,” says Biggar. “They were facing this massive shortfall relative to 2021 within capital markets revenue.”

That’s not a problem for CVB Financial, which specializes in serving businesses with up to $300 million in revenue in Southern and Central California, though it also offers typical accounts for individuals.

“The physical footprint of our bank is smaller, the average customer is larger, and there's operating efficiency in that model,’’ says CEO Brager.

CVB is a lean operation with a near best-in-class efficiency ratio at 38.6%, compared with an average of 56.2% among all FDIC reporting institutions. In fact, it ranked in the top half of every metric Forbes tracked. Its net profit in 2022 was $235 million, and it has been profitable for 183 quarters in a row, covering most of its history since it was founded in 1974.

Next up, Abilene, Texas-based First Financial Bankshares is debuting at No. 2 as the top-performing consumer-focused bank on the list. It finished 2019 with $8.3 billion in assets, but it now has $13.1 billion and serves 350,000 Texans after the pandemic supercharged its growth. Chairman and CEO Scott Dueser, who has worked for the bank since 1976 right out of college at Texas Tech, says its average net new accounts added in the years prior to the pandemic was about 5,000. But it added 12,000 accounts in 2020 and another 16,000 in 2021. Dueser brought Ritz-Carlton cofounder and former COO Horst Schulze on board as a consultant to teach customer service.

“We were one of the first banks out of the blocks on PPP [Paycheck Protection Program] loans. We put it on a software that we have that you could fill out the application on your phone or your computer immediately,” says Dueser. “We were closing PPP loans within three days. It was a huge success for us, because we did so many of them, but we also moved their [PPP borrowers’] deposits.”

Founded in 1890 as Farmers and Merchants National Bank in Abilene, when it was a frontier town of 3,000, the bank gathered $33,000 in deposits in its first year. Dueser says the bank has made money in all 133 years of its existence and has increased its earnings for 35 years in a row. Its 79 locations are now clustered on the outskirts of big cities, primarily surrounding the Dallas-Fort Worth metroplex and Houston and sprinkled along the Interstate 20 corridor between Dallas and Abilene to the west, capturing the sprawl that made Texas the second state to surpass a population of 30 million last year. First Financial’s 43.8% efficiency ratio is the 11th-best on the list, and it’s in the top five in CET1 ratio.

First Financial and CVB Financial represent a common theme of smaller regional banks dominating the top of the list. The largest bank in the top 10 is Pasadena, California-based East West Bancorp, with $62.6 billion in assets. The highest-ranked institution with at least $100 billion in assets is Capital One, which is primarily a credit card company and came in at 14th.

Despite the relative underperformance on profitability and credit quality metrics, the big four trillion-dollar banks still have $11.1 trillion in assets, representing 42% of the $26.4 trillion the FDIC tracks in 4,746 commercial banks and savings institutions and another 4,308 community banks. The total number of banks has been shrinking for decades–10 years ago, there were 7,181 FDIC-insured commercial banks and savings institutions–as banks have merged to make compliance and back-office operations more efficient and to keep up technologically with larger peers.

“There are a few national banking franchises that help consumers who want to visit a branch while they’re traveling, but others prefer the community touch,” Biggar says. “Small businesses also tend to like to deal with a friendlier touch, so those continue to have value.”

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