With this special section, the American Banker took it upon itself to find 10 of the best performing community banks in the business.

We think we've succeeded.

Picking the "best" community banks out of a universe of more than 9,000 is risky. What makes a banker, and by extension a bank, superlative is largely subjective. Banking is at its heart a personal and local enterprise. A great community bank in Pueblo, Colo., might be a nonstarter in Lansing, Mich.

But if you start off with qualities that can be reasonably deemed as coveted by most if not all community banks - and find measures for each of those qualities - you can begin to know where to look.

For our purposes, only banks with less than $3 billion of assets (or subsidiaries of like-sized holding companies) were prospects. Then we selected qualities that characterize good community banking - small- business lending, agriculture lending, and de novo banking, for example - and found the top performers in each category.

Only two banks in this section were chosen by nonfinancial statement criteria - the largest stock price increase and the richest purchase price to book value - for the market was their final judge.

Much of the weeding out was made possible by the considerable skill of the paper's chief statistician, L. Michael Cacace. If a bank's financial statements are its scorecard, Mr. Cacace is the grading machine.

While their stories are in the ensuing pages, the banks share a few qualities that warrant observation.

First off, they are small. Only two of the 10 banks featured here have more than $200 million of total assets, and six have less than $100 million. Further analysis suggests that another unifying element is low noninterest expense. A low-cost bank may not be the most profitable, but the most profitable banks are all low-cost.

Furthermore, the 10 community banks with the greatest return on assets from the beginning of 1992 through Sept. 30, 1995 all have less than $300 million of assets, and five have less than $100 million.

Only four of the banks we've highlighted have any branches. For many, geography was not a barrier to the scope of their business.

Only one has a loan-to-deposit ratio of less than 60%, and most have more than 80%. Bread-and-butter lending, not fee income, is what most of these bankers emphasize.

Finally, none of the banks here could be characterized as freakish, unless one can characterize as strange a 10-year quest to have the highest return on assets of any bank in the country. (See page XX.) No, each bank is run by solid, block-and-tackle managers who claim very little in the way of genius.

They have simply concentrated on what they do best, and for now at least, they are all the best at what they do.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.