Big banks show there's not just one recipe for success

While smaller banks were chasing cheap deposits, trimming expenses and searching for loans, the biggest banks in the country didn't have to stick to one playbook to drive profits last year.

Banks with more than $50 billion of assets have other levers to pull for revenue, and the top performers each have their own mix for success.

Smaller banks, which mostly have spread-based business models, can keep growing their loan portfolios and maintain healthy margins, said Claude Hanley, a founder and partner at Capital Performance Group. But as balance sheets inflate, loan-pricing competition heats up, and funding that debt will likely outrun core deposits, he said. To make up for margin contraction, those institutions often expand their fee-based services.

"When you get big, you're going to have a different model," Hanley said.

The top 10 banks on the list were able to increase their ratio of noninterest income to average assets by 19 basis points last year, versus one basis point across all peers.

The 37 banks on the list are ranked by the consulting firm Capital Performance Group based on their three-year average return on average equity, according to data from year-end 2024. See the full list in the table below. 

Hanley said it was tricky to find common threads among strong-performing banks above $50 billion of assets — a list that ranges from traditional lenders in Texas to massive wealth management firms — because the top performers showed there are many ways to deliver.

Last year was also a tough year for loan growth, meaning that other earnings boosters were even more important for banks.

JPMorganChase, which is 80 times larger than some banks in the same asset tier and finished fifth, can lean on dozens of different revenue streams to buoy its performance. In 2024, investment banking fees helped the bank log record profits.

Raymond James, which finished second, owes its bottom line largely to wealth management services. The company does offer loans and operate branches, which are part of the criteria to make the top-performers list, but old-school banking services aren't a major portion of its bread and butter. The company's ratio of noninterest income to average assets — 13.77% — far outpaced the asset tier's median of 1.12%.

Meanwhile, East West Bancorp, a Pasadena, California-based bank that primarily serves the Asian and Asian American banking markets, relies more heavily on its lending business.

The $76 billion-asset institution's niche services help it outperform peers, Hanley said. Last year, East West, which was third on the list, was able to reel in deposits during a Lunar New Year certificate of deposit campaign.

Banks can also use mergers and acquisitions to bolster their balance sheets — and their financial performance.

First Citizens BancShares topped the list for the second year in a row, largely due to its acquisition of the failed Silicon Valley Bank in 2023. Buying a failed financial institution can be a huge windfall for banks because those assets can supercharge their size at a discounted price. But it can also come with the risks of growing too much too fast.

The North Carolina bank, which quadrupled in size in four years, saw loan and deposit growth continue to outpace peers in 2024, though by slimmer margins than in the previous year. After a huge boost to the bank's bottom line in 2023, net income stabilized in 2024. While its massive return on average equity of 63.92% from the year it bought SVB has kept First Citizens at the top of the list, the bank's performance was around average in 2022 and 2024. 

UMB Financial, which is also expanding its balance sheet through M&A, landed on the top-10 list for the first time this year after growing its assets past $50 billion. The Missouri bank has a robust fee income business, in part from a large health savings account portfolio, which provides debit interchange revenue and sticky, low-cost deposits.

The bank also saw the strongest growth in loans and core deposits among the top performers, and the second highest surge in net income.

As UMB illustrates, a bigger asset size doesn't necessarily mean higher returns. The median size across the banks on the list was $156 billion, but among the top 10, it was $82 billion.

"It's not all about size," Hanley said. "There's always this sense that 'We need to get bigger.' Well, size alone isn't a driver of top performance, and it's not a driver of top performance among the biggest banks."

What's more, among the big banks, financial performance isn't necessarily always the most important factor to investors. 

The stock prices of most big banks rose in 2024. After a rough start to the year, hopes that the Trump administration would fuel economic growth spurred a post-election surge for bank stocks.

But stock performance across the asset tier didn't correlate strongly with financial performance. At the median, stock prices went up 28%, while they rose by 30% for the top 10 performers.

Hanley said bank investors likely base their trades on a slew of factors, which include but aren't limited to financial performance.