The ABA Top Performing Banks in a Time of Financial Crisis: Can They Outperform the Worst?

Filbeck, Greg; Preece, Dianna; Xin Zhao

In this study, we examine whether firms exhibiting superior return on equity lauded in the annual ABA Banking Journal Top Performing Banks survey prior to the financial crisis of 2007--2009 experience weak performance in periods during and after the financial crisis. We anticipate the Worst Performing Banks sample to outperform the Top Performers during and following the crisis due to lower levels of leverage leading up to the financial meltdown. We construct a Worst Performing Banks sample of the weakest financial performers based on ABA criteria in the banking industry pre-crisis to determine whether it outperforms the ABA's Top Performing Banks sample during and following the 2007--2009 financial crisis. While we do not find support that the Worst Performing Banks were less leveraged and thus exhibited less financial risk leading up to the crisis, we do find support that the Worst Performers performed less poorly than the Top Performers both during and following the financial crisis.

UNITED States; BANKING industry; GLOBAL Financial Crisis, 2008-2009; ORGANIZATIONAL performance; FINANCIAL crises; FEDERAL Deposit Insurance Corp.

Banking & Finance Review, 2016, Vol 8, Issue 1, p1

1947-7945

Academic Journal