RankingBanking 26 Digital - Flipbook - Page 6
4
Why DepositFocused Banks
Outperform on
Margins
By Polo Rocha
T
here are plenty of metrics to
banking — or those whose niche is the community
evaluate a bank, but few are as
they call home.
effective as net interest margin.
“For every bank, for all of time, the net interest
It is, after all, one that captures
margin has been the driver of success,” says
the age-old business model of
Charles “Skip” Hageboeck, CEO of City Hold-
banking: Lend money at a higher
ing Co., parent company of City National Bank.
interest rate than you pay on your
“If you don’t have a sufficient margin, you can’t
deposits.
afford the expenses to go along with the bank,
It’s a model that can take many variations.
usually.”
It can work for small community banks in rural
The $6.8 billion City Holding in Charleston,
areas, or those in hot urban markets. It can work
West Virginia, is among the top performers on this
for banks with $1 billion in assets, those pushing
year’s RankingBanking, which is sponsored by
$10 billion or those far north of that mark. And it
Crowe, a professional services firm. The list uses
can work for those who find industry niches within
four metrics — return on average total assets, re-
