News and notes from the final day of Bank Director’s annual Acquire or Be Acquired conference.
As always, the one constant in life is change. Right now, with deflation in the Eurozone (is it time to bid Greece goodbye from the EU?), declining oil prices and the sluggish growth of the U.S. economy, optimism about banking’s future is tempered by present uncertainties. As we heard from KBW, a handful of factors have contributed to the slower pace of our economic recovery:
- Resetting of global GDP growth expectations;
- Europe nearing closer to deflation;
- Japan expanding its stimulus spending;
- Modest wage growth; and
- Conservative consumer and small business confidence.
Nonetheless, there is a true sense of optimism permeating the conference here at The Phoenician… especially in terms of the future of community banking.
A spirited half-day of conversations and presentations that ranged from capital raises to digital growth opportunities. With respect to trending topics, I made note of the following: to drive growth, the biggest banks are exploring opportunities in three areas: (1) deals for smaller product/technology/capability based companies, (2) analytics and (3) digital; as I noted on Sunday, bank M&A deals per year (as a % of total banks) are at historically high levels — and we see banks with strong tangible book value multiples dominating the M&A space; finally, there is a widening gap in terms of buyer valuations meeting seller expectations.
Picked Up Pieces
I made note of the following this morning:
- Google’s partnership with Lending Club came up early and sparked quite a few sidebar-type conversations;
- New skills, better analytics is where bigger banks are struggling the most.
- Per Josh Carter at PwC, mobile phones, wearables and integrated devices (car, shopping cart, item RFID tags) have barely scratched the surface in terms of how they will shape our lives.
- Several presenters noted the multi-charter bank model is under pressure.
- Looking ahead, bank stocks may struggle to outperform the broader market if unable to meet earning-per-share (EPS) expectations.
- By extension, if the Federal Reserve does not raise interest rates, EPS estimates will be at risk for negative revisions.
I will post a recap video tomorrow morning on About That Ratio and you can use the hashtag #AOBA15 to read through the last three days tweets. Now, it is time for me to head out to the golf course to shake off the rust at our annual golf tournament.