As we open up the Four Seasons “dining hall” for lunch, allow me to share some trending topics I took note of this morning at Bank Director’s Bank Chairman & CEO Peer Exchange. For example, virtually every financial institution cites maximizing shareholder value or franchise value as their overriding strategic objective. In addition:
- Four significant challenges face community banks today:
- Tepid loan growth;
- Margin compression;
- Higher capital requirements; and
- Expense pressure & higher regulatory costs.
- These five issues confront/confound CEOs and Chairmen:
- What is our unique strategy for revenue and profitability growth?
- How do we attract and retain best talent?
- How do we deal with growing compliance burden?
- How do we take advantage of technology?
- How do we lower our efficiency ratios?
- I wrote about size earlier today; the “sweet spot” for banks, at least from an investor’s perspective, depends on where you are in the country, but think the $5Bn to $15Bn range. A lot of work is being done through IPOs and M&A to get to that spot.
- Since 2013, the traditional bank IPO market has revived and there have been numerous success stories. According to a presentation made by an EVP at KBW this morning, the capital markets for banks and thrifts with assets less than $10 billion have been dominated by common stock issuance, while larger banks have relied predominantly on senior debt.
Finally, on the M&A front, consolidation is in line with historical rates, and we may see 220-230 mergers done this year. More to come from Chicago. Keep current via Twitter and @aldominick, @bankdirector and with #chair14.