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Among banks headquartered in the region, Englewood Bank & Trust and Charlotte State Bank & Trust — both Crews Banking Corp. subsidiaries — were the clear winners in the first quarter of 2019 based on returns generated, or a bank’s performance on its money.
Banks’ returns, or income, are typically evaluated against the size of the bank — that is, a larger bank ought to make more money than a small one. In order to normalize the comparison, analysts compare different banks’ returns to either assets, essentially the size of the bank’s loan portfolio, or equity, the capital invested by shareholders to support the bank’s business operations.
Because accounting rules require assets be equal to shareholder equity plus debt, it holds that a bank with zero debt would have an equivalent ROA and ROE. But because most banks have substantial amounts of debt (e.g. deposits), ROEs are typically much higher than ROA. The difference is an indicator of leverage.
Charlotte State Bank & Trust, with $368.6 million in assets through March 31, and Englewood Bank & Trust, with $307.4 million, manage similarly sized balance sheets and are in the middle of the pack in size among Gulf Coast banks. But both managed to generate an ROA above 2% in the first quarter, and each generated an ROE above 24 Federal Deposit Insurance Corp. data shows.
This isn’t new territory for these banks: the pair led the region in ROE in the first quarter of 2018 as well, and each bank generated an ROA above 2% for that time period.
Winter Haven-based CenterState Bank generated a slightly smaller ROA than these two leaders in the first quarter, at a little less than 1.5%. But it did so with a substantially larger asset base of $12.6 billion — 34 times larger than Charlotte State and 41 times larger than Englewood.
— Alexander Walsh
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