January 26 2010|08.53 AM UTC

Stan Reybern

America’s Best & Worst Banks For 2010

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There is a classic saying that bad ages to live through are good ages to learn from. By all accounts, today’s times constitute a bad age for banking and financial companies, and the experiences many Americans have with them. However, nothing is easier than complaining. Far more useful and instructive is examining how various banks are being run and extrapolating the behaviors of these institutions. In short, what sets good banks apart from bad banks? Why are some continuing to thrive while others (even frighteningly similar competitors, in some cases) are spinning their wheels? Today, BillShrink sets about answering these questions with profiles of the six best and six worst banks in America for 2010.

The Best Banks

Bank of Hawaii

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Topping Forbes’ list of America’s best banks is Bank of Hawaii, whose conservative strategy was vindicated during the reckless 2000′s. According to HonoluluAdvertiser, Bank of Hawaii prospered mainly by “sticking to a conservative policy on loans at a time when many banks were lured into risky real estate deals by the promise of higher returns.” Expressing pride in the chief virtue of his bank, Bankoh CEO told Forbes that “boring is good”, contrary to the behaviors of more “exotic” banks and finance companies over the last decade. In fact, Bankoh’s success highlights a timeless lesson in just about any industry – while competitors will often rush to chase the “next big thing” (subprime mortgages, in this case), rewards often await those who stick to the fundamentals that have worked for generations. Nor, it should be noted, did Bank of Hawaii accept any bailout money.

UMB Financial

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Kansas City-based UMB Financial can boast truly humble beginnings, opening its doors with $1,100 in first day deposits. The fact that it holds $10.2 billion in assets today owes largely to the same conservative, old-fashioned, fundamentals-focused approach Bank of Hawaii exhibited. Mariner Kemper, UMB’s CEO, remarked that “As most banks are looking forward to forgetting 2009, we look back knowing our hard work and adherence to traditional business practices continues to reap rewards” when asked his thoughts on being recognized as America’s second best bank, according to Yahoo Finance. As it turned out, regional banking was key to UMB’s success. Rather than expanding its business throughout the U.S., UMB stuck to “our time-tested prudent business practices, such as making loans within our territory, building relationships with our customers and understanding that strong underwriting practices produce quality results.” Perhaps uncoincidentally, UMB also declined to participate in the federal government’s TARP program.

Commerce Bancshares

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Yet another bank to maintain strong performance and high assets thanks to a conservative management strategy is Kansas City-based Commerce Bancshares. After joking that there “must be something in the water” for KC to boast 2 of the top 5 banks in the country, TradingMarkets.com points out that it’s hardly the water. More instrumental to the success of Commerce and it’s more than $18 billion in assets is the fact that only 1.6% of its loans were categorized as “non-performing.” Put another way, Commerce had in reserves an amount roughly equal to 114% of its non-performing loans. Local consumers unsure of where to park their money during the recession (and after) have some excellently-managed choices in UMB Financial and Commerce Bancshares.

Prosperity Bancshares

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The success of Houston’s Prosperity Bancshares calls to mind the old saying “an ounce of prevention is worth a pound of cure.” While many banks are staggering beneath the weight of non-performing loans that should never have been made in the first place, Prosperity quietly boasts the best NPL as a percentage of total loans rate in the industry. Prosperity also has more reserves as a percentage of NPL’s than any of the 100 largest banks in the country, according to Forbes. Like UMB, Prosperity Bancshares also declined to participate in TARP, maintaining that it was “considered well capitalized under regulatory guidelines and should be able to continue building its business and take advantage of opportunities” according to MarketWatch.

SVB Financial

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SVB Financial did accept $235 million in TARP money (and promptly repaid it, according to MSN), but nonetheless benefited greatly from its long-standing relationships with prominent venture capitalists. The Santa Clara bank also reportedly “played an important role in the early days of companies including Cisco Systems, Electronic Arts and Intuit”, as Forbes writes. The bank has also evidently kept itself going strong by playing a part in new technologies, including clean tech. SVB’s website notes that it was recently honored for working with “approximately half of all venture capital-backed cleantech companies and holds deposits for nearly 200 cleantech companies nationwide.” Perhaps the best lesson to extract from SVB’s success (to include a 1.6% NPLs/loans ratio) is to remain focused on the customers you are best suited to serve — tech companies and VCs, in this case — rather than expanding haphazardly for expansion’s sake.

Community Bank System

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Finally, we round out the six best banks with Dewitt, NY’s Community Bank System, whose reserves as a percentage of non-performing loans are second best among the 100 largest banks in the U.S. With branches in Chautauqua, Cattaraugus, Allegany and Wyoming counties, Community Bank System did not make the fatal error of trying to operate beyond where it had proven itself stable. As has been seen so far, a major key to bank stability and success amidst the recession has been adherence to modest, manageable, even “boring” management practices, even when that meant bucking the trend of the larger banking industry. The numbers don’t lie however, as CBS has continued to thrive irrespective of the larger industry’s woes.

The Worst Banks

Flagstar Bancorp

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Being named the worst bank in America (among large banks) by Forbes isn’t much to brag about, but the facts are unavoidable. After “racking up huge losses for three straight years”, Flagstar has slipped into the decidedly unenviable position of having one of the lowest net interest margins (1.6%) while simultaneously having among the highest amount of non-performing loans. In fact, NPL’s comprise almost 10% of all of Flagstar’s outstanding loans. Unsurprisingly, Flagstar Bancorp is located in Michigan, which is rapidly acquiring a stigma as an economic wasteland.

R&G Financial

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When you have the highest ratio of non-performing assets, the highest ratio of non-performing loans and the lowest capital loan ratios, it’s tough to imagine being anywhere but among the worst banks in America. Puerto Rico’s R&G Financial finds itself precisely in this lamentable state, with non-performing loans comprising a mind-blowing 20% of its overall loans outstanding. Perhaps now is a good time for R&G’s management to re-assess the operating practices that landed it here and take some lessons from the six best banks discussed earlier!

Sterling Financial

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Spokane-based Sterling Financial had about as good a year on the NASDAQ as it did when compared to its peers, which is to say, a terrible year. Besides being among the industry’s worse capital ratios at the end of 2009, Sterling was also the third worst performing stock on NASDAQ of 2009, falling 93% in value according to USA Today. But the trouble just keeps coming for Sterling, whose parent company was recently slapped with an employee lawsuit stemming from “heavy imprudent investment of employees’ retirement plan assets into Sterling stock, despite the bank’s foray into risky commercial real estate loans” according to the Pudget Sound Business Journal. Reportedly, the plan held over $13 million in Sterling common stock, good for roughly 20% of the plan’s overall assets. Here again we are reminded of the virtues of time-tested, old-fashioned bank management!

Capitol Bancorp

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Lansing, Michigan’s Capital Bancorp has fallen upon such hard times that it is actually in the process of divesting assets in six of the seventeen states it serves simply to stay alive. IStockAnalyst reported in December 2009 that Capital Bancorp was indeed “planning to sell its e-filing financial services division” as part of an “ongoing effort to strengthen its capital ratios”, which are scraping pavement in comparison to its comparably sized competitors. Even this, however, was evidently done with an eye toward becoming more like the regionally-focused banks at the top of this list. CEO George Leis remarked that he hoped the sell-off would “help return Pacific Capital Bancorp to its roots of being a pure community bank serving the central coast of California.”

Banco Popular

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The biggest of any bank on the bottom 10 of Forbes rankings, Banco Popular also holds the dubious distinction of being fifth-worst among comparably sized banks in terms of reserves as a percentage of non-performing loans. Despite being more than a century old, Banco Popular apparently needed to fall this far before officially renouncing its ties to the subprime mortgage market in 2007, according to Reuters. It’s been three years since Banco Popular vowed to renew its “focus on profitable businesses”, but the bottom line numbers are still pretty dismal thus far!

Central Pacific Financial

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Hard as it may be to imagine Hawaiian banks at the top and bottom of this list, it simply reinforces how crucial a bank’s own operating practices are to its success or failure. While Bank of Hawaii is the toast of the banking sector, Central Pacific Financial (also headquartered in Honolulu) is a laughingstock. The bank holds an appalling 48% of reserves to NPLs, and accordingly, its stock price – hovering below $10 – is down an alarming 86% from 2008. In striving to understand why two seemingly similar banks produced such wildly different results, NationalPost.com pointed to the way in which Central Pacific “got deeply involved with subprime lending in California.” This contrasts, of course, with Bank of Hawaii’s admittedly “boring” management style, which has equated to bottom-line financial performance that is anything but boring.

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{ 159 comments… read them below or add one }

Thomas October 5, 2010 at 9:51 am

I see things different than the rest of you. I went from the worst bank to the best bank and only changed branches.BB&T

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Anonymous September 15, 2011 at 3:32 pm

just dont use SunTrust. they did not mail the check as they promised online, and they did everything to get rid of their responsibility for the late checks.

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Pat McDermott October 5, 2010 at 10:27 am

SunTrust is the worst. They manipulate yours fund so that there is an overdraft and charge you then on top of the overdraft they charge you anohter fee.

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Steve October 5, 2010 at 11:54 am

Credit Unions are usually a better bet than banks because they return profit back to the shareholders – you. They generally have fewer and lower fees and their ATMs usually honor other Credit Unions. Thank the big banks for their bailout by joining a Credit Union…

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Rick October 5, 2010 at 1:59 pm

u all forgot 5/3 bank it is the is the worst bank in the us

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Anonymous February 17, 2011 at 2:29 pm

i agree

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Anonymous April 20, 2011 at 10:12 pm

I totally agree. The amount of fees they stick to you is ridiculous.

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Rena October 14, 2010 at 8:00 am

I have one for you. Chase is the worst bank ever. If you write a check to someone they will charge that person six dollars, unless they have an account there; it does not matter that you have one there. When you deposit a check you can only have so much of it available for your use right then. You have to wait until the check clears before you can have the rest (this goes on for months and months, I am on my 3rd month, now). In addition, one of the officers asked me to deposit cash…Ah… where am I going to get cash if my bank does not cash my check? Not to mention the purpose of having a bank is so that you do not have to pay check cashing fees to someone else, and if someone else can give me cash then why can’t my bank do it?

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NIL December 9, 2010 at 10:58 am

i AGREE CHASE IS THE WOREST BANK . I WANT OUT OF THEM

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Ayeisha December 22, 2010 at 10:06 am

Chase is definitely the worst bank. They rearrange your purchases so that you overdraft and the make your payroll checks and cash deposits Pending when they are supposed to be available. HATE THEM!

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Rudy October 27, 2010 at 11:22 am

I believe this is a joke… Everyone says big banks are a just out to take peoples money… Well if you look at relationship banking instead of putting down your blinders to look at fees, you will see that US Bank and Bank of the West actually help the customers that want to be with them. If you balance your account and take care of your finances you shouldn’t have to worry about the fees at all… Credit Unions are in business for the same reasons as a bank. They want to make money!!!

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Anonymous April 15, 2011 at 9:36 am

Do you work for one of these banks

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Not so Happy with Bank of the West November 14, 2011 at 3:57 pm

Bank of the west just changed policy whereas they used to take any online bill pay money out of your account immediately while they sent the check. Now they don’t take the money out until the check clears and if you take for granted the old way of paying a bill online and being done with balancing your account you are screwed. it took me about three months to realize what they had done without telling us. I live check to check and appreciated that perk to avoid waiting for a check to clear. It won’t even show the check as pending either. So you are blind to the status in some regards.

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Anonymous December 4, 2010 at 1:32 pm

capital one is the WORST!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
AND WHEN YOU CALL CUSTOMER SERVICE, YOU’RE CALLING INDIA. GIVE ME A BREAK, WHAT HAPPENDED TO THE US TAKING CARE OF THE US

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J A December 15, 2010 at 7:11 pm

Just when I thought Bank of America was bad – along comes US Bank who charges fees on fees for EVERYTHIng. My payroll deposit did not make it to the bank – when I called to find out why they told me to “go borrow money from relatives”. They charged me for lack of money in my account and then a $33 NSf fee on top of that for not covering the lack of money in my account $25 fee. Now we are up to this every month..AND they will not close the account because they can’t charge fees when the account is closed. Instead of helping me and doing research on why my check didn’t get deposited they told me to go find relatives to borrow from. Lack of compassion? or bordering on dishonest?

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Dan December 19, 2010 at 3:06 pm

Chase is by far the worst bank.

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Dizzle January 12, 2011 at 10:03 am

I bank with chase by default; I was originally a Wamu customer with free accounts. My accounts now incur fees unless I…
a) commit to direct deposit of $550+
b) maintain a minimum balance of $1k (no less – I can’t remember the exact amt)
c) or use my debit card a minimum 5 times per month

I use my debit card more than five times a month, surely. But why the obligation?

Chase are as greedy as any other of the biggest, most crooked banks in America and regard their customers to be nothing more than revenue sources.

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Andrea July 8, 2011 at 5:22 pm

How’s this for ridiculous. I work part time because I’m a full time student but I still direct deposit at LEAST $600 every two weeks. This month I get hit with a $12 dollar fee. Why? Because my direct deposits come in as 2 transactions and their system does not recognize it as me making a deposit over $500! When I point out the flaw in their system the associate tells me there is nothing they can do about it. In other words, I just have to give the bank $12 a month because their software is faulty. I plan to close my account first thing tomorrow morning.

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dxd January 24, 2011 at 11:23 am

Why is CHASE not in the list of the worst?

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Banker11 February 1, 2011 at 9:35 am

If you don’t balance your check book or keep track of your account in some manner any bank you are with is going to be the worst because they will charge fee’s. Banks are in the business of making money. Why work so hard for your money and not pay attention to where it’s going – just doesn’t make sense. At some point the individual is going to have to take some responsibility. You have the ability to check your accounts online – in person – via telephone – and with your cell phone (at some banks).

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need new bank February 20, 2011 at 9:13 am

I agree Chase is the worst. They hold my husband’s payroll checks till next business day and if I cash it on a Saturday it is not available until Tuesday! My husband’s employer doesn’t offer direct deposit. And what is with all purchases pending all the time? Never had any of these problems with the credit union i was a member of. Either going back to the credit union or find a better bank. Is any bank better?

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pam the blam February 27, 2011 at 9:41 am

Saturday is not a buiness day so its as if you did your transaction on a Monday… 1 buiness day delay its not that bad idk why are you complaining. i hate chase but at least i have a valid reason.

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Erin February 24, 2011 at 1:56 pm

Wells Fargo are definitely dishonest. In 2008 someone wrote me out a personal chk for under 300 dollars, well 100 of the Check cleared and so I owed the bank. I paid them immediately following the news, however, they still closed my account after only having it opened for 2 weeks. The personal banker over the phone said that he’d look into re-opening my account in the next week and he never got back to me. Well fast forward to 2 weeks ago, I opened up another Checking & savings with them and on Tuesday I tried to withdraw money & they told me that my account is being closed due to what happened in 08. I did everything to keep my credibility with these crooks & these ppl did absolutely nothing for me! All the personal banker cared about was making his commission for opening my acct, he never followed through with talking to his manager like he said he would. 2nd time with these ppl and years later to deal with the same sorry ass BS. Wells Fargo is full of thieves and can care less who they screw over! Thank God for other options. I really hope they go under.

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Sneed March 21, 2011 at 5:21 pm

Wow, a business that is out to make money. I’m not entirely sure where you people work. Thank god you dont work with or for me. With people like you that get upset because you pay for valueble services its no wonder Amrica is in such bad shape. You will gladly goto a supermarket and buy a can of soup for 1000% markup. But when a bank charges you an aveage of 33 cents a day to safeguard your money and provide online access and a debit card for your convienince its a crime. get a life!

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Jason June 27, 2011 at 11:40 am

I Concur.

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Former Bank Employee September 8, 2011 at 9:08 am

Valuable Service??? We should not have to pay for the “priviledge” of depositing our money into any bank. Let’s not forget that we are providing them the usage of “our” money to conduct “their” business as well. While the customer does have a responsibility of tracking their transactions, the banks have a responsibility to offer products that are free of charge and that fit diverse life-styles. Most do and some don’t but customers need only to inquire and actively seek those products out. Yes, the banks are in the business of making profits but can only do so with the use of our money. Take advantage of their free products, (not just the ones they advertise). Trust me, they are there for the taking and will save you a lot of grief over maintenance fees. Let the banks work for the priviledge of you trusting them to handle your finances. That’s what I do.

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anonymous October 1, 2011 at 12:09 am

oh look! it’s a Republican.

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Steve May 21, 2011 at 12:41 pm

ok i was not going to make any comments… but when i got to the last post by sneed I can’t help myself. Do you have any idea how business works???? I am sure you don’t… you listen to fm radio for free, why is that? because they advertise and that pays for the the radio, same with local TV stations. How can a bank give you free checking and make money to pay for it services? By taking the money i put in the bank and loaning it to people who need a loan. They charge anywhere from 3% to 23 % for that loan and keep the money made from it. If you are lucky they might pay you 0.05 % on the money they borrowed from you. That is only one, very small way that banks make money. not including what they charge stores ever time you use your debit card as a credit card, ECT, ECT. you show how stupid you are by thinking you pay 33 cents a day for these services. you don’t pay crap for them. AND THE REASON WHY. They provide these service to compete for your business. While the CEO pays himself over a million a year. Please tell us how your lame 33 cents covers that. it because of people like you that crapy banks thrive and don’t have to work for the money they earn. you just do what they tell you to do and sign what ever form they put in front of you. Get an education then come back and talk to me.

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Former Bank Employee September 8, 2011 at 9:10 am

Well said!

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Sandy November 24, 2011 at 6:27 am

Love it!

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Goofpod July 9, 2011 at 2:56 pm

One comment: http://moveyourmoneyproject.org/

This is how we all get back at the big banking monopoly and save our American financial infrastructure at the same time. Makes sense! Keep it local…

- Goof

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Anonymous September 15, 2011 at 3:29 pm

I don’t know which bank is the best, but i definitely know which is the worst – SUNTRUST! I used its online bill pay services so that my leasing company can receive the rent on August 5th. Guess when my leasing company received the check? August 12th. And therefore I was charged $115 late fees. SunTrust totally messed up and it treated me very rude, refused to take any responsibility about the late fees.
Tell everyone, don’t use SunTrust Services. SunTrust is awful.

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fedup January 7, 2012 at 10:16 am

Webster Bank is another terrible bank. You deposit your check and you don’t have access to your money for 3 days, and if you do, you get hit with a charge. Stay away.

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