Nifty 50: The Best Users of Capital in Banking


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Bank Director's ranking of the best users of capital in banking.

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Nifty 50: The Best Users of Capital in Banking

  1. 1. Bank Director’s Nifty 50 The top 50 best users of capital
  2. 2. Bank Director’s Nifty 50Bank Director magazine went hunting for banksthat deliver high returns, despite high levels ofcapital.In an age when regulators are demanding highercapital, which tends to produce lower earnings,this can be extremely hard to do.
  3. 3. Bank Director’s Nifty 50Investment firm Sandler O’Neill + Partnerscompiled this list from the 484 banks and thriftslisted on the NYSE, NYSE Amex and NASDAQOMX stock exchanges, using core return ontangible common equity and the ratio ofaverage tangible common equity to tangibleassets.
  4. 4. Steve Trager, CEO Republic Bancorp, Inc.The winner of the Nifty 50 was Republic Bancorp Inc., a Louisville, Kentucky-based bank holding company with $3 billion in assets.Republic Bancorp looks for non-traditional product opportunities where returns are higher. It is the largestprocessor of income tax returns in the country. The FDIC forced it to scale back the product after 2012–citingriskiness.
  5. 5. Scott Dueser, chairman andCEO of First FinancialFirst Financial Bankshares Inc., based in Abilene, Texas, was the secondranked best user of capital.“Our board’s approach has always been to maintain high levels of capital because capital is what got us throughthe hard times,’’ says F. Scott Dueser, chairman and CEO of the $3.8-billion asset holding company.
  6. 6. Bank Director’s Nifty 50Like Republic, First Financial invests most of its earnings back into the company, rather than paying high dividends.
  7. 7. Bank Director’s Nifty 50National Bankshares Inc. in Blacksburg, Virginia,was the third best user of capital.Commercial National Financial Corp. in Latrobe,Pennsylvania, was no. 4 on the ranking.
  8. 8. Joe Evans, chairman & CEO ofState Bank Financial Corp.State Bank Financial Corp. in Atlanta was the 5th best user of capital.Joe Evans and his team sold Atlanta-based Flag Financial Corp. in 2006 and were in a position to buy anotherbank in 2009 in an FDIC-assisted transaction. State Bank was born. It soon acquired five other failed banks.
  9. 9. Comparison of Top 5 Banks 25 20 15 10 5 0 Republic First Financial National Commercial State Bank Bancorp Bankshares National Financial Financial Core ROTCE Average TCE/TA* Core ROTCE is return on tangible common equity and based on core income as defined by SNL Financial and average TCEfor eight quarters ending June 30, 2011. Average TCE/TA is tangible common equity to tangible assets and represents theaverage for eight quarters ending June 30, 2011.Source: SNL Financial and Sandler ONeill + Partners
  10. 10. Bank Director’s Nifty 50 Mark Fitzgibbon, director of research at Sandler O’Neill + Partners, says most of the top ranked banks are located in smaller, urban markets where business conditions are probably better.
  11. 11. Bank Director’s Nifty 50Another similarity is lowexpense ratios, attractive netinterest margins–a reflectionprobably of pricingadvantages compared tobanks in more competitivemarkets–and low creditcosts, which suggests the top Mark Fitzgibbon, director of research at Sandler O’Neill + Partnersranked banks and thrifts arebetter lenders.
  12. 12. Bank Director’s Nifty 50 Check out the full Nifty 50 ranking here, where it appeared in Bank Director magazine’s 1st quarter issue.