The Peoples Bank Hits #2 in 2023 Northeast Community Bank Ranking

With $319.1 million in total assets as of Dec. 31, 2023, Chestertown, Maryland-based The Peoples Bank took the second spot on S&P Global Market Intelligence's 2023 ranking of the top 50 US community banks in the Northeast region with under $10 billion in assets. The Peoples Bancorp Inc. subsidiary has seven branches in Maryland, with deposits reaching $282.4 million at year-end 2023. Gross loans and leases rose by 7.1% annually to $187.6 million as of Dec. 31, 2023. The bank's full-year 2023 net interest margin was 3.98%, up from 3.02% in 2022. The Peoples Bank logged a negative 0.12% net charge-off ratio in 2023. Annual growth in operating revenue for the bank was 16.4% and the cost of funds stood at 0.21%, which was much lower than the top 50 median of 0.66% and the 1.57% median recorded for all 426 eligible banks.

Both Fulton Savings (#1 ranking) and The Peoples Bank logged a 1.88% pre-tax return on average assets, higher than the 1.55% group median. In addition, the ratio of gross loans and leases and held-to-maturity securities to total deposits was 78.8% for both banks.

To compile this ranking, S&P Global Market Intelligence calculated scores for each company based on seven metrics: pretax return on average assets, cost of funds, operating revenue growth, net charge-offs to average loans and leases ratio, nonperforming assets and loans 90 days or more past due as a percentage of total assets, gross loans and leases and held to maturity securities to total deposits, and adjusted tangible common equity to tangible assets ratio weighted at 25%, 20%, 10%, 10%, 10% and 15%, respectively. Each company's standard deviation from the industry mean was calculated for every ranking metric, weighted, then combined to derive a performance score. To help normalize the data and mitigate the impact of outliers, caps and floors were applied for each metric.

Criteria for the ranking included a gross loans and leases-to-total assets ratio of at least 33% with no more than half of those loans in credit cards; a leverage ratio of at least 5%; no active severe enforcement action; a result other than "substantial noncompliance" or "needs to improve" in the bank's most recent CRA exam; a yield on loans and leases of no more than three times the industry median of 5.74%; and no more than half of the entity's revenue coming from nontraditional banking activities. Additionally, industrial banks, nondepository trusts, companies with a bankers' bank certification, and banks with parent companies that have total assets of $10 billion or more were omitted.

Based on the above criteria, 426 banks and thrifts were eligible for ranking.

Original article by Zain Tariq, Arpita Banerjee and Zuhaib Gull for S&P Capital IQ - Market Intelligence - Wednesday, March 20, 2024 12:01 PM ET - article edited by Meghan Livie for The Peoples Bank.