Park State Bank, a 100-year-old lender in Minnesota, topped S&P Global Market Intelligence's ranking of the top 100 U.S. community banks under $3 billion in assets, edging out runners-up from Nevada and Nebraska.
Founded in 1916 to serve the financial needs of local steelworkers, Duluth-based Park State now operates four brick-and-mortar branches off the shores of Lake Superior, along with another location in Minneapolis. Since 2014, the bank has quadrupled in size to $136.6 million in assets at year-end 2018, thanks in part to its acquisition of neighboring Pioneer National Bank of Duluth in April 2018. The deal helped to fuel 127.2% loan growth in 2018, the second-highest growth rate among the top 100 community banks in the ranking. In addition, Park State remained highly profitable in 2018, recording a return on average tangible common equity, or ROATCE, of 26.31%, while maintaining a 55.25% efficiency ratio.
The bank's credit portfolio contains a mix of residential mortgages, commercial real estate, and commercial and industrial loans. With few CDs and a large concentration in noninterest-bearing deposits, Park State recorded a solid net interest margin of 5.18% for the year. Credit quality was also a bright spot: The bank ended the year with a 0.01% net charge-off ratio and a 2.72% adjusted Texas ratio.
In light of changes to the Federal Reserve's Small Bank Holding Company Policy Statement in 2018, the asset threshold for this year's community bank ranking was raised to $3 billion from $1 billion. In previous years, S&P Global Market Intelligence published two community bank rankings — one for institutions below $1 billion in assets and one for institutions with $1 billion to $10 billion in assets. This year, the rankings are split between community banks with less than $3 billion in assets and those with $3 billion to $10 billion in assets.
Las Vegas-based Bank of George and Nebraska-based Ericson State Bank took the runner-up spots in this year's ranking. Bank of George outperformed the top 100 median in four of the ranking's six metrics, while Ericson State Bank recorded a particularly low efficiency ratio and strong ROATCE.
Oakdale, Minn.-based Platinum Bank, meanwhile, catapulted into the No. 4 position, marking its first appearance in the annual rankings. All told, six Minnesota-based banks made the top 100 ranking.
Two consistently strong performers — Oklahoma City-based Bank 7 and Flushing, N.Y.-based Amerasia Bank — made their eighth straight appearance on the ranking, coming in at No. 10 and No. 25, respectively, for 2018. No other community bank has consecutively appeared on the list more.
While 2017's No. 1, Phoenix-based Metro Phoenix Bank fell out of the top 100 to No. 181 in 2018, last year's runners-up fared better. Oklahoma-based First Bank of Owasso and Murray, Utah.-based FinWise Bank, formerly No. 2 and No. 3 in 2017, remained among the top 100 at No. 70 and No. 12, respectively.
California placed 13 of its 108 eligible banks in the top 100 in 2018, followed by Missouri and Texas with 10 institutions apiece.
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