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Source: Zions Bancorp.
When it comes to performance, smaller banks often have an edge. Every year, Bank Director publishes a ranking of the 300 largest publicly traded banks known as RankingBanking. In the 2023 ranking, banks in the $1 billion to $5 billion asset range slightly outperformed larger banks on median return on average assets and return on average equity.
While the megabanks vacuumed up deposits from nervous customers after the failures of three large regional banks last spring, much of that money has since flowed back to smaller banks. That’s what has happened at Zions, after Simmons watched $7 billion, or nearly 10% of non-brokered “customer deposits,” walk out the door in the first quarter of 2023. By the end of the year, $6.7 billion of those deposits had returned.
Simmons closes his letter by arguing that long-term investments in people and technology, not scale, are what make for a sustainable bank. He quotes Douglas Malloch, an early 20th century American poet, to emphasize his point.
Good timber does not grow with ease:
The stronger wind, the stronger trees;
The further sky, the greater length;
The more the storm, the more the strength.
• Naomi Snyder, editor-in-chief for Bank Director
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