Forbes’ annual list of America’s Best Banks for 2023 has revealed that small regional banks are dominating the top spots, despite the turmoil experienced in the banking industry last year. City Holding Co., the parent company of West Virginia’s City National Bank, has emerged as the top bank on the list, with a focus on retail banking and a low percentage of uninsured deposits compared to national banks. City National’s CEO attributes their success to a commitment to customers in their core markets and a shift in strategy towards profitability rather than growth.
City National’s strong financial performance, with a stock gain of 18% in 2023, has propelled it to the top of Forbes’ list by ranking in the top 20 of five different categories. While investors may be drawn to City Holding’s stock, they should be aware that they are paying a premium for the bank’s stability. City Holding is selective with its growth through acquisitions, preferring to remain disciplined and not overpay for acquisitions. Other banks in the top five on the list include Westamerica Bancorp., International Bancshares Corp., Bank First Corp., and HBT Financial.
Despite the dominance of small banks in the top positions, JPMorgan stands out as the lone trillion-dollar institution in the top 100, ranking 26th on the list. JPMorgan saw a significant jump in its ranking from last year, with a 48% one-year share price gain and strong financial metrics. Other trillion-dollar banks like Bank of America, Citigroup, and Wells Fargo failed to crack the top 100 due to poor marks on financial metrics like net interest margin and net charge-offs.
JPMorgan’s record net interest income in 2023, boosted by the acquisition of First Republic Bank, has contributed to its strong performance. The acquisition of First Republic Bank has been immediately accretive, with net income attributable to the bank in the last three quarters of 2023. The banking industry as a whole has seen a few failures in 2023, with the most assets ever recorded in a single year. However, overall, the industry appears to have emerged with a clean bill of health, with 95% of FDIC-insured banks being profitable.
Despite challenges faced by the banking industry in 2023, small regional banks like City National have demonstrated resilience and success. JPMorgan’s strong performance and strategic acquisitions have also contributed to its position in the top ranks of Forbes’ list. The industry as a whole has weathered the storm of last year’s turmoil and remains profitable, with the largest banks seeing strong returns for shareholders.
