State Banks Show Well in Rankings

In a year in which the FDIC said “almost one in four institutions was unprofitable … and almost two out of every three institutions reported lower full-year earnings than in 2007,” Oklahoma banks managed strong showings in rankings based on performance.
In reviews of bank performance in 2008 compiled by the ABA Banking Journal, two Oklahoma banks were at the top of their categories and state institutions dominated three other divisions of Top 25 rankings.
Ranked by return on average equity, MidFirst Bank, based in Oklahoma City, was the No. 1 performer in the category for private and foreign owned banks and thrifts with total assets of $3 billion or more. With $14.6 billion in assets, MidFirst showed a 33.89 percent ROAE for 2008.
Security First National Bank of Hugo topped the performance list for non-S Corp. banks and thrifts between $100 million and $3 billion in assets. Its ROAE was 29.89 with assets of $101 million.
BancFirst Corp. of Oklahoma City was the highest ranking state bank among public banks with total assets of $3 billion or more. Ranked 18, its ROAE was 11.33 with assets of $3.9 billion. Tulsa-based BOK Financial Corp. was 42nd on the list with an ROAE of 7.87 and assets of $22.7 billion.
Oklahoma banks held five of the top 25 slots for S-Corp banks and thrifts with assets between $100 million and $3 billion, six of the top 25 slots for non-S Corp banks and thrifts with less than $100 million in assets and four of the top 25 slots for S Corp banks and thrifts with less than $100 million in assets.
Bristow-based Community Bank ranked fourth in the non-S Corp banks and thrifts with less than $100 million in assets. It showed an ROAE of 26.10 percent with assets of $62.8 million.
The ABABJ study of domestic publicly held depository institutions with assets over $3 billion as of Dec. 31, 2008, found 145 public banks, thrifts, and holding companies qualified under its selection criteria.
“In a year where the average ROAE for the pool of analyzed institutions was -4.21%, the strong performance of this year’s top 25 is all the more extraordinary,” the report said. “And yet, most of 2008’s top performers generated strong earnings through relatively ordinary banking activities–generating low-cost deposits, making quality loans, and focusing on serving one particular segment extremely well (rather than trying to be all things to all people), all while keeping a sharp eye on non-interest expenses.”
The events of 2008 impacted private and foreign-owned banks and thrifts with assets of $3 billion or more just as severely as their public counterparts, the ABABJ said. The average return on average equity among large private institutions dropped from 7.45 percent in 2007 to -2.36 percent in 2008.
“The top performing private institutions used two of the same strategies applied by top performing public institutions to counter the effects of these events—a return to core banking and a focus on niche market segments,” the report said.
For example, this year’s top performer, Midfirst Bank of Oklahoma City, focuses on FHA and VA mortgage lending and benefited from the significant ramp-up in activity under these two government programs in 2008 as the number of other secondary market participants declined. One- to four-family mortgage loans increased from 38.3 percent of Midfirst’s portfolio in 2007 to 44.5 percent in 2008. This increased lending activity brought Midfirst both additional interest income and additional servicing fee income. Midfirst also benefited from the unique tax treatment available to Subchapter S Corporations.

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