The best-performing community banks and thrifts in the country are concentrated in the Northeast, according to a new report from Sandler O'Neill & Partners LP.

Of the 25 banks and thrifts that appeared on Sandler's annual "all-stars" report released Friday, 13 are in the Northeast, including five in New Jersey, four in Massachusetts and two in Pennsylvania. That's not including two banks represented from Maryland and Virginia — Mid-Atlantic states that are often lumped in with Northeast states.

Sandler culled its list from 486 publicly traded banks and thrifts with a market capitalization of less than $2 billion, examining their performance relative to all banks and thrifts for the 12 months that ended June 30.

Among the top 25 this year, the median return on average equity was 10.3%, compared to 4.4% for their peers, and the median earnings per share growth was 35.7%, versus 18% for the peer group, according to data compiled by Sandler and SNL Financial LC (see related graphic).

The top 25 also had significantly lower levels of problem loans than their peers and demonstrated superior loan and deposit growth.

Sandler has been compiling its all-stars list annually since 2004. Its intention, wrote the report's authors, Mark Fitzgibbon and Daniel Arnold, is to "provide investors with a narrow list from which to uncover the next crop of leading mid-cap banks and thrifts and, most important, expose them before they are discovered by the rest of the world."

Fitzgibbon and Arnold said that banks from the Northeast are disproportionately represented largely because the economy in the region has held up better than other parts of the country. In past years, many of the all-stars came from formerly fast-growing states that have been hit hardest by the real estate bust, they noted.

The banks and thrifts range in size from the $403 million-asset Bancorp of New Jersey Inc. in Fort Lee to the $19.4 billion-asset SVB Financial Group in Santa Clara, Calif. Of the top 25, five are thrifts including one, ViewPoint Financial Group Inc. in Plano, Tex., that was a credit union just six years ago.

Sandler noted that among this year's top 25, only three — Cardinal Financial Corp. in McLean, Va., Independent Bank Corp. in Rockland, Mass., and United Financial Bancorp. Inc. in Springfield, Mass. — returned from last year. The remainder of the list is made up 13 newcomers and nine companies that had been ranked in prior years, but not in 2010.

"The downturn in the credit cycle over the last few years has resulted in a marked shift in makeup of the … members," the authors wrote.

SVB, the parent of Silicon Valley Bank, is the largest of the newcomers, followed by the $14.5 billion-asset Valley National Bancorp in Wayne, N.J., the $10.2 billion-asset Investors Bancorp Inc. in Short Hills, N.J., and the $9.9 billion-asset F.N.B. Corp in Hermitage, Pa.

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