Author: Al Dominick

I am the Chief Executive Officer of a privately-held company that provides data analysis, research and advisory services to the C-Suite and boards of financial and healthcare companies. For years, I have delighted in bringing in business, building relationships and getting difficult things done. Today, I am a bridge between key decision makers; for instance, the C-suite at both FinTechs and Banks. I regularly present on, speak to and write about emerging issues immediately relevant to executives & boards of directors. While my professional role as CEO certainly influences my writing, the views I share on my social sites reflect my own personal opinions.
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You’re Never Too Experienced

A man who views the world the same at fifty as he did at twenty, has wasted thirty years of his life.

Muhammad Ali certainly spoke the truth when he shared this thought in 1975 — and he makes a compelling case for attending an event like tomorrow’s Bank Board Training Forum at the historic Hermitage Hotel in Nashville, TN.  Personally, I made it into Nashville yesterday morning and with a few unexpected minutes on my hand, found myself engrossed in our inaugural issue of Bank Director magazine from 1991.  To open the magazine, our first editor opined “gone are the days when a bank could afford to stack the board with a compliant group of community leaders whose board membership was little more than a public badge of professional achievement.”  Just as true then as now!

While there are a number of banking conferences happening across the country over the next few weeks, this is the only one I know of that caters to an audience of key decision makers committed to the concept a strong board makes for a strong bank.  The curriculum, developed by industry experts and spearheaded by our editor, Jack Milligan, provides some 120 attendees with both foundational knowledge and the latest information on best practices in all of the critical areas that directors must understand.  From growing the bank to protecting its assets, attracting and compensating the right team to getting current with accounting, regulatory and legal requirements, I know we’re in for a spirited day and half.

If you’re curious to see what we have planned, here’s a link to both BankDirector.com’s event page and also a special piece authored by my friend and colleague Jack entitled “What You Don’t Know Can Hurt You.”  As he makes clear, curiosity has no age.

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Keeping Up With JPMorgan Chase

As much as executives at community banks need to focus on the emerging challenges posed by non-bank competitors, so too are the priorities of the globally systemic banks like Citi, BNY Mellon and JPMorgan Chase important to understand.  So file today’s post under “know thy enemy….”

At a time when many community bank CEOs sweat margin compression, efficiency improvements and business model expansion, it is very interesting to take note of the six areas of focus for JPMorgan Chase.  Last week, Gordon Smith, their Chief Executive Officer for Consumer & Community Banking, provided insight into the behemoth’s strategic agenda at the company’s investor day.  Their focus touches on the following key areas; the first five should resonate with bank leaders at institutions of all sizes:

  1. Continue to improve the customer experience and deepen relationships;
  2. Reduce expenses;
  3. Continue to simplify the business;
  4. Maintain strong control environment and automate processes;
  5. Increase digital engagement; and
  6. Lead payments innovation.

As Mr. Smith lays out, their deposit growth has been strong and core loans show continued improvement.  From a community bank CEO’s perspective, this is important as JPMorgan Chase’s organic growth may precipitate an even greater desire for smaller institutions to merge with another.  Indeed, I continue to see banks eyeing deposits, not just assets, as a catalyst for bank M&A (*this is not to suggest JPMorgan wants to buy another bank, as I don’t think regulators will allow any significant acquisitions from them nor do they seem to have even a sliver of interest. While they have a rich history of acquisition, I’m pretty sure they’ve reached their cap in terms of deposit market share).

Further, with their bank branches becoming more “advice centers,” it strikes me that many community bank operating models should aggressively shift to employing fewer people serving in more of a consultative capacity.  True, this model has been effectively emulated by some, most notably pioneered by Umpqua in the Pacific Northwest.  However, I see far too many local and community banks still arranged as if a bank will be robbed faster through the front door than it will the internet. The implication remains that a transaction trumps a relationship.  Finally, as banks like JPMorgan Chase divest various branches based on their drive for greater efficiencies, it should be helpful to think about some of their spun-off locations as potential targets that can bolster a regional presence.

So if you work for a community bank, it’s important to pay attention to the big banks. Sometimes, they can help you.

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Focused on Financial Analytics

When it comes to tapping the creativity and ingenuity of the financial technology sector, I think this equation says it best.

For me, the term “big data” jumped the shark a few years ago.  Much like investment bankers shelved their  “wave of consolidation” pitch, I remain hopeful that the clichéd data term gives way to something more appropriate, descriptive and dare I say agile?  Nonetheless, the concept of sifting through massive amounts of structured and unstructured information to identify meaningful insights is nothing to scoff at.  Truth-be-told, it has interested me since my time at Computech, a leader in agile and lean application software development and IT operations & maintenance that was recently acquired by NCI.

Figuring out discrete patterns to better prepare for the future is huge business — and I continue to see the largest financial institutions in the U.S. making investments in financial analytics.  I was reminded of this drive to leverage new technologies while re-reading my notes from a Q&A session I had with BNY Mellon’s head of Strategy and Innovation last September at our FinTech day at NASDAQ.  There, I made note of three companies — Kensho, Discern and ClearStory — that had the potential to transform part of the financial sector.  FinTech Focused.001With said notes in hand, I dove a deeper into each company’s background and offerings, finding all three bring interesting new models and technologies to bear on automating and enhancing the investment research process.  So as I’ve done with past posts (Three FinTech Companies I’m Keen On and Spotlight on FinTech), let me share a little about each one:

  • Kensho is pioneering “real-time statistical computing systems and scalable analytics architectures — the next-generation of improvements to the global financial system.”  Backed by Goldman Sachs and Google Ventures, and with clients that range from Wall Street’s global banks to several of the best performing hedge funds, think of the 2013 startup as a “Siri-style service for investors, analysts and traders” (h/t to the FT for the comparison).
  • In the interest of fair disclosure, all three of my siblings have worked for investment management firms, so they may buckle at Discern’s description of “conventional” investment research relying “on solo analysts armed with narrow expertise, simple tools and a personal network of resources. Nonetheless, it’s an important juxtaposition when you look at what its data aggregation platform offers.  If you agree with their assertion that the “earlier one becomes aware of a risk or opportunity, the less it costs” the more attracted you might be to this SF-based company.
  • Finally, the data intelligence company ClearStory works with financial institutions on collaborative research and customer acquisition analysis.  Their premise is to both speed and simplify the cycle of research across distributed teams, including “accessing, merging, analyzing files and a variety of external data sources.”  As they share, “competitiveness on the front lines of business is dictated by the speed of data access and the quality of informed decision-making.”

Personally, it is very interesting to learn about, and subsequently watch, companies like these these spur transformation. If you are game to share your thoughts on FinTechs worth watching, feel free to comment below — or via twitter, I’m @AlDominick, about those companies and offerings you find compelling.

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Bank Director’s 2015 Acquire or Be Acquired Conference: A Week in Pictures

As we wrap up “AOBA week” there are so many to thank… be it Kelsey for reminding me that “coffee is for closers“… Katilyn, Robert and Daniel for their contributions as recognized by their peers (“stay thirsty my friends”)… Laura, Mika and Michelle for bringing the prize patrol to the golf course… the list goes on & on of the super heroes we had band together to make this year’s event such a success.  Also, a HUGE congratulations to our controller, Ryan McDonald, and his wife who welcomed their first child into the world this week (a healthy baby boy).  So allow me to share some “behind the scenes” pictures from our time at The Phoenician. 

Kaitlyn… holding it down in the “office”
Chelsea’s Kitchen for a pre-AOBA dinner
G+Ts with Robert
Batman & Robin out of costume
Saturday evening’s reception
Bill’s espresso cups get into the act
One of our fancy team dinners
The new point/counterpoint setup
A look into the general session room
Jack wrapping up AOBA with NASDAQ’s help
Kelsey, our ringer on the golf course
The prize patrol — out and about on the golf course
Mika and one of our favorites, Oscar Ortiz
Superheroes… revealed
Don’t be afraid of the french fry
Michelle, I did see the masks
… and yes, we’re heading to New Orleans
Sunday’s reception (c/o Alstrin Photography)
Come on in (c/o Alstrin Photography)
The team! (c/o Alstrin Photography)
The BD orange (c/o Alstrin Photography)
A full breakout session (c/o Alstrin Photography)
Loved the Phoenician (c/o Alstrin Photography)
Thx to all our sponsors (c/o Alstrin Photography)
Handrolled (c/o Alstrin Photography)
Stepping to the podium (c/o Alstrin Photography)
Big thanks to KBW for their continued support – their CEO and me (c/o Alstrin Photography)
Dimming the lights (c/o Alstrin Photography)

If you’re interested to see what we’ve covered, you can click on a number of posts (this video about a CEO panel and this  recap of three things I noticed on Sunday, this video about the new consolidators, this video from Sunday night, this written recap from Monday, this video from Monday evening, this video from Tuesday and this written recap from Tuesday).  Also, our managing editor, Naomi Snyder, authored a number of great highlights pieces that posted to BankDirector.com.  And as a final recap of Acquire or Be Acquired, let me share the video I used to welcome the team to our wrap-up dinner on Tuesday night (w/ thanks to our friends at Snapshot for doing this with me!)

P.S. – it is Aloha Friday!

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Wrapping Up Bank Director’s 2015 Acquire or Be Acquired Conference

To paraphrase the New England Patriot’s Bill Belichick, we are #OnToNashville.  Yes, Bank Director’s 2015’s Acquire or Be Acquired conference is solidly in the books and our annual Bank Board Training Forum at the historic Hermitage hotel in Nashville, TN is now “on the clock.”  But before I depart from sunny Arizona, a very big thank you to everyone who made this possible!

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Three Observations From Bank Director’s 2015 Acquire or Be Acquired Conference (Tuesday)

News and notes from the final day of Bank Director’s annual Acquire or Be Acquired conference.

Key Takeaway

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.

Trending Topics

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.

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From Bank Director’s 2015 Acquire or Be Acquired Conference: A 45 Second Video Recap of Day Two

On Tap For Day Three

Last night, I shared three takeaways from our second full day at AOBA (Three Observations From Bank Director’s 2015 Acquire or Be Acquired Conference). Looking ahead to our final half day, we kick things off with a series of discussion groups that address the following issues:

  • New Lending Markets for Community Banks
  • Growing with SBA Loans
  • Everything You Wanted to Know about Civil Money Penalties
  • Capital Plans & Nontraditional Alternatives
  • Incorporating M&A into Your Strategic Planning Process
  • Beyond eMail – Purpose-Built Tools for Mobile Executives

With coffees in hand, we move into our first general session, led by PwC, entitled “What You Can Learn from the Country’s Biggest Banks.” Following that presentation, we have back-to-back breakout sessions available before closing with “The Butterfly Effect of Technology on Banks Today.”  To see an abbreviated PDF version of the three day agenda, please click 2015 AOBA Agenda (Overview).

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To follow the conversation on Twitter, I invite you to follow me @aldominick, follow @bankdirector and tweet using the hashtag #AOBA15.

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Three Observations From Bank Director’s 2015 Acquire or Be Acquired Conference (Monday)

News and notes from the second day of Bank Director’s annual Acquire or Be Acquired conference.

Key Takeaway

My biggest takeaway from the second full day of Acquire or Be Acquired (#AOBA15 via @bankdirector): instead of asking why take the risk of doing a deal or why take the risk of creating a high performing bank, a better question might be can you be relevant if you don’t?

Trending Topics

To start the day, I polled the audience — using an automated response system — on a number of non-M&A topics.  Of note, the majority of attendees believe the greatest organic loan growth opportunity is in commercial real estate.  Likewise, the majority of people voted for cash management services to businesses when asked what provides them with the greatest fee-growth opportunities.  Anecdotally, the issues I took note of where, in no particular order:

  • The expansive views of the regulators continue to frustrate bankers;
  • Where stock will be issued in a merger, an auction may not only be not required, but can be counterproductive from maximizing value to shareholders — hence the reasons why negotiated sales processes are gaining in popularity;
  • Key regulatory obstacles remain centered on compliance -‒ for buyers and sellers alike (e.g. BSA, consumer and increasingly, CRA);
  • There have been 28 transformational mergers — one bank acquiring another that is over 25% of its size — since 2013. These are merger of like-sized companies (yes, we are getting away from the term MOE). The market likes these deals — stocks in these deals have out-performed the market.

Picked Up Pieces

A really full day here in Scottsdale, AZ with quite a few spirited discussions/debates.  Here are some of the more salient points I made note of throughout the program:

  • The only thing worse than a flat yield curve is an inverted one.
  • If stocks do well after a deal, means you have the runway to do more deals in the future.
  • When it comes to buying another institution, keep in mind just because somebody has the money doesn’t mean they are going to spend the money.
  • Per Bill Hickey at Sandler O’Neill, capital markets are “open for business” given the lower rate environment and attractive yields/costs for both issuers and investors alike.
  • Without big bank M&A, community groups now review and protest transactions by much smaller banks.
  • A fundamental truth: as you grow, compliance & regulatory expectations grow with you.

More to come from The Phoenician and Acquire or Be Acquired tomorrow morning.

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From Bank Director’s 2015 Acquire or Be Acquired Conference: The “New Consolidators” (Video)

To kick things off today, we took a look at those banks reshaping the banking industry.  With M&A providing an avenue for banks to drive improved operating leverage, earnings, efficiency and scale, we focused on the emergence of mid-sized regional banks that are growing through the consolidation of smaller banks.  My thanks to Jack Kopnisky, President & CEO, Sterling National Bank & Sterling Bancorp (NYSE: STL), Ben Plotkin, Vice Chairman of the Board, Stifel Financial Corp (NYSE: SF) and Frank Sorrentino, Chairman & CEO, ConnectOne Bank (NASDAQ: CNOB) for sharing their time and opinions in their session entitled “The New” Consolidators this morning.

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From Bank Director’s 2015 Acquire or Be Acquired Conference: A 45 Second Video Recap of Day One

On Tap For Day Two

Last night, I shared three takeaways from our first day at AOBA (Three Observations From Bank Director’s 2015 Acquire or Be Acquired Conference).  Looking ahead to our second full day, we kick things off with a series of discussion groups that address the following issues:

  • IPO or Sale? Key Factors Bank Executives Should Consider
  • How Banks Should Make the Decision to Sell or Buy – Lessons for Buyers & Sellers
  • How Size Matters: Regulatory Considerations for Deals
  • How Does a Buyer Begin The M&A Process?
  • The Characteristics of a Well Received Deal: The Importance of Gauging the Market’s Reaction For Both Buyers and Sellers

From there, we move into various general and breakout sessions.  These range from presentations on “The Power of In-Market Mergers” to “Are You a Buyer or Seller… or Something Else?”  To see a high-level, PDF version of the three day agenda, please click 2015 AOBA Agenda (Overview).

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This afternoon, I’ll post a brief video recap of our first general session and later, three things I picked up over the course of the day.  To follow the conversation on Twitter, I invite you to follow me @aldominick, follow @bankdirector and tweet using the hashtag #AOBA15.

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Three Observations From Bank Director’s 2015 Acquire or Be Acquired Conference (Sunday)

News and notes from the first day of Bank Director’s annual Acquire or Be Acquired conference.

Key Takeaway

As was the case at last year’s Acquire or Be Acquired, the most successful banks have a clear understanding and focus of their market, strengths and opportunities.  One big takeaway from the first full day of Bank Director’s conference (#AOBA15 via @bankdirector): to be a successful player in today’s bank M&A market, one needs adequate capital and earnings for regulatory approval of a deal, the infrastructure in place to both acquire and grow an institution and available sellers in the bank’s target market.

Trending Topics

Overall, the issues I took note of where, in no particular order: $5 to $10Bn public banks are in the sweetest of the sweet spot for investors; cash is often useful to sellers as a form of price protection — and can benefit buyers as fewer shares are issued in a transaction; earnings estimates, not P/E Expansion, will drive bank stocks in 2015; deal pricing has a direct correlation to the size of the seller and the size of the buyer; bank boards should be particularly mindful of shadow banking’s strong relative growth.

Picked Up Pieces

I had a chance to talk with a number of attendees and introduce quite a few of our presenters.  Here are some of the anecdotes I made note of throughout the day:

  • There were 281 bank M&A transactions in ’14 as compared with 214 in ’13.
  • This M&A activity, in terms of deal value, increased from $14bn in ’13 to $18bn in ’14.
  • Whereas Mergers-of-Equals (MOEs) were the hot topic at this time last year, I can count on one hand the number of mentions today.
  • Per KBW, we have had 20 current straight quarters of improving credit quality — the longest since 1991.
  • According to Curtis Carpenter with Sheshunoff Investment Banking, 19x earnings is becoming a common median deal price.
  • From a discussion on M&A-related capital raising… “in general, the pool of private placement buyers is increasing and includes many private equity firms as well as traditional institutional investors.”
  • Bank executives would be wise to plan for this low-rate environment to last “forever.”

More to come from The Phoenician and Acquire or Be Acquired tomorrow.

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From Acquire or Be Acquired: A Video Recap of Today’s L. William Seidman CEO Panel

Former FDIC Chairman and Bank Director’s Publisher, the late Bill Seidman, was a huge advocate of a strong and healthy community bank system.  We honor his memory and this sentiment with a CEO panel each year.  My thanks to David Brooks, Chairman & CEO of the Independent Bank Group, Mark Grescovich, President & CEO of the Banner Corporation, Edward Garding, President & CEO of First Interstate BancSystem and Daryl Byrd, President & CEO of IBERIABANK, for sharing their thoughts on a variety of growth-related issues earlier today.