Rates are low and compliance costs are rising. But banks with $2 billion or less in assets still have momentum in several key areas, based on data compiled by Capital Performance Group.
Return on average equity is climbing at smaller banks. The median ROAE last year improved 24 basis points from 2013.
Net income at smaller banks increased at an accelerated rate last year, compared to 2013.
Net income, as a function of assets, also improved at all community banks. The ratio held steady at top-performing institutions.
Spread Income Stabilizes
Healthy lending activity has helped community banks keep net interest income stable, as a percentage of total assets.
Margins Widen a Bit
In addition to loan growth, net interest margins slightly expanded at community banks last year.
Fee Income Holds Steady
Noninterest income, as a percentage of assets, was stable last year, indicating that banks are boosting fees in line with their increasing size.
Revenue Outpaces Expenses
Community banks were able to increase revenue last year at a faster rate than expense growth.
Lower Credit Costs
Provision expenses continue to decline at smaller institutions, though many bankers believe such costs will inevitable start to rise because of higher loan levels.
Bad Assets Decline
Banks are continuing to purge nonperforming assets, allowing some to release reserves and pad earnings.