Recently I pulled a list of 65 of the nation's largest banks. From that list I was able to pull historical data for 24 of those banks all the way back to 1980 in total price returns, which includes reinvestment of dividends. 

Of those banks, the four we will discuss in this article are the worst. The bottom of the barrel. History does have a tendency to repeat itself, and that means any long-term investment in any of these banks should come with more than a spoonful of caution.

Setting the stage
You may be curious as to why only 24 of the original 65 banks have data available. The reason is a combination of industry shifts and complex consolidation in the industry. Consider that the FDIC's Quarterly Banking Profile only goes back to 1984, a year when 17,886 banks operated in the United States. Today there are just 6,589 banks. That consolidation represents a massive restructuring of ownership interests, not to mention new bank charters growing and merging and further complicating the process.

To make the process simpler and remain valuable to investors today, I made the decision to stick with Jan. 1, 1980, as the starting point. That tidy date allows us to include the entire savings-and-loan crisis in the data. Data was provided by YCharts.

Before jumping into the worst of the worst, I want to take a quick aside to consider Citigroup (NYSE:C). This massive, global bank has gone through complex machinations through acquisitions, mergers, and divestitures over the years that make a historical comparison like this akin to comparing apples to oranges. As such, YCharts only reports Citi's historical prices through the mid '80s. I therefore excluded Citi from the actual analysis, simply because I didn't have data back thru January 1, 1980. But Citi still deserves a spot at this table.

Citigroup does have data going back through the mid-1980s, and if I used that result, instead of strictly adhering to the Jan. 1, 1980 benchmark, Citi's performance would have been the second worst in the data set.

The results
The top-performing bank in this analysis returned 62,680% since 1980. That bank was a large outlier, though; only five banks returned more than 10,000%.

The average was 9,578% and the median was 4,630%, the difference in which reflects the handful of high-flying banks at the top of the list. Only one bank failed to post a positive return, and we'll talk more about that embarrassing performance in just a moment.

So, without further ado, here are the worst of the worst since 1980.

BankNormalized Total Return Price Since 1/1/1980
Bank of America Corporation (NYSE:BAC) 2,510%
Huntington Bancshares Incorporated (NASDAQ:HBAN) 1,980%
KeyCorp (NYSE:KEY) 1,650%
Regions Financial Corporation (NYSE:RF) (22.7%)

A negative-22% total price return over 35 years for Regions Financial? Ouch!

What's the main driver of such awful performance? It's difficult to pin down any specific reason; each bank has its own story, its own history, and its own mistakes. However, taking a look a chart of the total return price highlights one major similarity.

I included Cullen/Frost Bankers (NYSE:CFR) in the chart, which was the median bank in the original analysis, as a proxy for the rest of the industry. Note that this chart does not extend all the way back to 1980 because it includes Citigroup.

RF Total Return Price Chart

Each of our worst-performing banks were absolutely hammered in the financial crisis, and each has failed to bounce back in any meaningful way. These banks were overwhelmed with problem loans, loan losses, and capital short falls, and their share prices suffered the consequences of that mismanagement.

While top banks such as Wells Fargo (NYSE:WFC) and M&T Bank (NYSE:MTB) bounced back from the woes of 2008 and 2009 (as did even middle-of-the-road performers like Cullen/Frost), these poor performers were simply left in the dust.

Here is the same chart again, this time including some of the higher-performing banks and without Cullen/Frost. The trajectories for Wells and M&T Bank tell the story. The contrast following the financial crisis is remarkable.

RF Total Return Price Chart

What's the Foolish takeaway?
There's a major lesson to be learned from this exercise. Namely, it behooves investors to invest only in the banks that are best positioned to survive and thrive throughout the entire credit cycle. These banks work tirelessly to build credit and risk cultures that protect the bank from the type of high-risk loans that have crushed Bank of America, Regions Financial, Citi, and others.

Take a look at Citi in the preceding chart -- during the boom time it was a top performer. It wasn't until the economy turned that its underlying cultural weakness surfaced.

The best banks will be efficient over time, through the highs and the lows. They'll produce strong returns on assets. They'll have leadership teams of unquestionable strength. They'll follow simple business models that any investor can understand.

In other words, they'll look a whole lot different than the laggard banks we've highlighted here.