As we approach the end of a tumultuous 2011, it's time to look back at the biggest winners and losers.

So in this series, that's exactly what we're doing, sector by sector. Today, let's take a look at the 10 biggest winners out of the thrifts. Although technically different from regional banks, the line between the two is gray. (Check out the list of the best-performing regional banks.)

First, the banking sector's backstory for the year, and then the results.

The backstory
This year, we saw U.S. Treasuries get downgraded from AAA status while Congress played politics instead of fixing the budget, a domestic economy that has been recovering from its financial crisis in fits and starts, big trouble in Europe, and a Chinese economy that doesn't seem so bulletproof.

The daily volatility in the banking industry has been tremendous because the economic crisis over the past few years has been largely driven by the financial industry and because the banking industry as a whole holds a great deal of sovereign debt.

However, global issues affect the biggest banks more than they do most regional banks and thrifts. Size in banking is usually directly proportional to the level of complexity and opacity in a bank's balance sheet. Giant Wall Street banks such as Goldman Sachs and Citigroup represent the extreme.

In addition, the smaller the bank, the more localized external factors tend to be. As an investor, you worry more about the local economy than about the economy of Greece. 

The 10 best thrifts of 2011
For context, the S&P 500 is down 1.7% after factoring in dividends this year. In other words, the market has been basically flat. Here are the 10 best-performing thrifts in 2011.

Bank Name

2011 Return

Price-to-Tangible Book Value

Kearny Financial (Nasdaq: KRNY) 10% 1.6
Viewpoint Financial 9.8% 1.0
Northwest Bancshares (Nasdaq: NWBI) 7% 1.2
OceanFirst Financial (Nasdaq: OCFC) 6.9% 1.1
Meridian Interstate Bancorp (Nasdaq: EBSB) 6.8% 1.3
Oritani Financial (Nasdaq: ORIT) 6.7% 1.1
United Financial Bancorp 6.4% 1.1
Capitol Federal Financial (Nasdaq: CFFN) 2.1% 0.9
Territorial Bancorp 0.9% 0.9
Berkshire Hills Bancorp (Nasdaq: BHLB) (2.6%) 1.4

Source: S&P Capital IQ. Return includes dividends, if any. Minimum market capitalization of $200 million.

What should strike you when you view these 10 "best-performing" thrifts is that only two have beaten the market over the past year. And neither has done so by much.

This may not be that shocking to you, though, given that thrifts tend to be highly weighted in residential mortgage lending. It's been a rough few years in that sector. Of course, when past returns have been flagging, there's often opportunity.

I like to find small thrifts and banks that have shown a good track record of operational performance. I want to see good, conservative lending, profits and good returns on investment, and preferably a dividend.

Looking down the list, I find that none of these 10 meets all my initial criteria for a small bank or thrift. For instance, only two of the 10 are currently provisioning for all their bad loans: Oritani and Berkshire Hills. Both seem to be conservative lenders, but neither has achieved recent returns on equity worth writing home about (both are less than 5%), and each is trading for a P/E ratio in the 20s.

I don't want to end on a downer, though, so let me leave you with a regional bank that has some of the best operational numbers I've ever seen. I wrote about it in our brand new free report: "The Stocks Only the Smartest Investors Are Buying." I invite you to take a free copy. Find out the name of the bank that I believe Warren Buffett would be interested in if he still had the financial flexibility to invest in small banks and thrifts.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.