When Will Bank Mergers Return?

WASHINGTON, DC — The bank M&A market is currently in a deep chill, thanks to the Covid-19 pandemic.  It is unclear when deal activity will heat up, so who better to ask than Tom Michaud, the President & CEO, Keefe, Bruyette & Woods, A Stifel Company, as part of Bank Director’s new AOBA Summer Series.  In this one-on-one, I ask him about:

  • The banking industry’s second quarter results;
  • Why bank stocks have not participated in the overall market recovery;
  • The medium and long term implications of the pandemic on the industry;
  • The area of Fintech he thinks will be the hottest for the balance of 2020; and
  • How the November elections might impact the banking industry.

There are 10 videos in the AOBA Summer Series, with topics directed at C-suite executives or boards. We talk about how important scale has become, given compressing net interest margins, increasing efficiency ratios and climbing credit costs. We explore why banks’ technology strategy cannot be delegated. We observe why some banks will come out of this experience in a bigger, stronger position. And we look at leadership, appreciating that many executives are leading in new, more positive and impactful ways. To watch, click here.

My Conversation with the CEO of Atlantic Union Bankshares

WASHINGTON, DC — Leaders are defined by their actions, especially when facing adversity.  In our just-released AOBA Summer Series, three standout CEOs joined us in a series of one-on-one conversations.  Each provided a personal view on how their concepts of leadership vary; all, however, described their aspirations to provide exceptional quality and sustained performance.

Screen Shot 2020-08-12 at 5.21.46 PM

For instance, Chuck Sulerzyski, President & CEO, at Peoples Bank joined John Maxfield, Editor-in-Chief for Bank Director magazine.  They talked about the bank’s response to the unfolding coronavirus crisis and how a bank like Peoples might offset some of the pressure on its earnings.

Stephen Steinour, Chairman, President & CEO, Huntington Bancshares virtually sat down with Jack Milligan, Editor-at-Large for Bank Director magazine.  The two explored how he continues to work with the bank’s board of directors to plan for a future beyond the pandemic.

And as you can see here, I had the distinct pleasure of talking with John Asbury, President & CEO, Atlantic Union Bankshares.  We talked about leading in new, more positive and impactful ways.

With the U.S. economy slowly recovering from its devastating pause, what we don’t know easily exceeds what we do. But, as we reflect on the COVID-19 crisis and its subsequent impact on the country, a few industry trends are becoming visible. Hence the introduction of Bank Director’s AOBA Summer Series, now streaming for free on BankDirector.com

Streaming Now: The AOBA Summer Series

Dreaming of a trip to Phoenix, and the Acquire or Be Acquired Conference, next January doesn’t seem so odd this summer.

WORKING FROM HOME — For decades, business leaders began to book their travel to the Arizona desert — for Bank Director’s Acquire or Be Acquired Conference — in early August. As evidenced by the nearly 1,400 at the Arizona Biltmore earlier this year, the annual event has become a true stomping ground for CEOs, executives and board members. Many laud it as the place to be for those that take the creation of franchise value seriously. I’ve even heard it referred to as the unofficial kickoff of banking’s new year.

Just seven months ago, Acquire or Be Acquired once again brought together industry leaders from across the United States to explore merger opportunities, acquisition trends and financial growth ideas.  With 418 banks represented, participants considered strategies specific to lending, deposit gathering and brand-building. They talked regulation, met with exceptional fintechs and networked with their peers under sunny skies.

Not one openly worried about a global pandemic.

Yet here we are, all of us dealing with fast-moving challenges and unimaginable risks.

So what can we do to help?

This is the question that proved the catalyst for our new AOBA Summer Series.  Indeed, we created this free, on-demand, compilation of thought leadership pieces to provide pragmatic information and real-world insight.

With CEOs and leadership teams being called upon to make decisions they have never been trained for, we realized the type of information typically shared in January has immediate merit this summer.  So instead of waiting until winter, this new Summer Series provides both color and context to the tough decisions — those with profound long-term consequences — that confront executives every day.

Ten videos comprise the AOBA Summer Series, with topics appropriate for the C-suite’s or board’s consideration.  Streaming on BankDirector.com, we talk about how important scale has become in the banking industry… how one’s technology strategy cannot be delegated… how it certainly seems that there will be banks that come out of this in a bigger, stronger state.  Here’s a screen-grab of what you’ll come across:

Screen Shot 2020-08-12 at 5.21.32 PM

In one-on-one conversations like these, we acknowledge how net interest margins are compressing — which will drive up efficiency ratios — and credit costs are climbing.  And we look at leadership, appreciating that many are leading in new, more positive and impactful ways.  In addition, this new series provides:

A SNAPSHOT ON CURRENT CONDITIONS
At our January Acquire or Be Acquired Conference, Tom Michaud, President & CEO, Keefe, Bruyette & Woods, A Stifel Company, provided his outlook for the industry. Now, we ask him to update his perspectives on M&A activity and share his take on the potential implications of the pandemic.  

HOW FINTECHS FIT
A growing number of technology companies have been founded to serve the banking industry.  Not all of them have what it takes to satisfy bankers.  During various sessions we learn how a variety of banks approach innovation — and the specific attributes a leadership team should look for in a new fintech relationship.

THE LEVERS OF VALUE CREATION
With nCino’s CMO, Jonathan Rowe, our Editor-in-Chief talks about the levers of creating value vis-a-vis the flywheel of banking. Together, they explain how certain technologies promote efficiency, which promotes prudence, thereby promoting profits, which can then be invested in technology, starting the cycle all over again.

Screen Shot 2020-08-12 at 5.21.46 PM

Hearing from investment bankers, attorneys, accountants, fintechs, investors and — yes, other bankers — about the outlook for growth and change in the industry proves a hallmark for Acquire or Be Acquired, be it in-person or online. 

As this new series makes clear, The future is being written in ways unimaginable just a few months ago.  We invite you to watch how industry leaders are making sense of the current chaos for free on BankDirector.com.

Acquire or Be Acquired: What’s All the Fuss About?

WASHINGTON, D.C. — The Acquire or Be Acquired Conference has long been a meeting ground for the banking industry’s key leaders to meet, engage with each other and learn what they need to grow their business. The audience encompasses traditional institutions, de novos, FinTechs and even a few credit unions. With today’s post, I explain what’s all the fuss about this premier event.

What's all the fuss about?

The allure of Acquire Or Be Acquired is as much for the networking as the various presentations. It is, after all, a hugely influential audience of 1,300+ setting up shop with our team at the Arizona Biltmore from January 26 – 28. 

For those joining us in Arizona, I encourage men to bring a sports coat or a jacket for the evenings as we plan to be outside for our receptions.  While the forecast calls for days in the 70s, the desert quickly cools off once the sun sets. In addition, the rumors of people being in their seats at 7:15 – 7:30 on Sunday morning? 100% true. We start promptly at 8:00 AM.

Looking to navigate the iconic Arizona Biltmore?  Our team put this helpful map together for attendees:

Screen Shot 2020-01-20 at 4.21.22 PM

In terms to the titles representing the 850+ bankers joining us, you’ll find:

CEO, CEO/Chair, Chair/President, Chair/President/CEO, Chair, President/CEO, CFO, Chief Administrative Officer, Chief Banking Officer, Chief Business Development, Chief Credit Officer, Chief HRO, Committee Chairs, CIO, Loan Officer, Secretary, Correspondent Banking Team Lead, Chief Accounting Officer, SVP, Director of Corp.Compliance, Chief Investment Officer, Chief Lending Officer, Chief Marketing Officer, COO, Chief Retail Banking Officer, Chief Revenue Officer, Chief Risk Officer, Chief Strategy Officer, Controller, Corporate Development Officer, EVP, Director Corporate Strategy, Senior Vice President, SVP, Commercial Lending, Vice Chair, Director of Finance, Director of FinTech Partnerships, Director of Transformation Mgt. Office, Treasurer, Director of Wealth Management, President, Chief Experience Officer, Data Analytics, EVP, Finance & Corp. Dev., EVP, General Counsel, Executive Chair, CXO, Former CEO, Internal Auditor, Strategic Planner & Owner, SVP, Business Planning, SVP, Deposit Services & Emerging Products, Vice Chair/CEO (2) and our course, Directors.

Along with these industry leaders, we have an amazing group of sponsors.  Such an audience allows us to put together exceptional panel discussions.  This year, fifteen banks with $20B+ in assets sending senior leaders to this event.  Specifically, U.S. Bancorp, PNC Bank, Truist, Fifth Third Bank, New York Community Bank, First Horizon National Corp., CIBC, Texas Capital, Pinnacle Financial Partners, Western Alliance, UMB Bank, First National Bank of Omaha, Mid First Bank, First Hawaiian Bank and Old National Bank.

Finally, the digital materials for the conference can be found on BankDirector.com. Once you register on-site, you’ll be given a passcode to access the materials that can be used throughout the event.

Can’t make it? Don’t worry: we intend to share updates from the conference via BankDirector.com and over social media platforms, including Twitter and LinkedIn, where we’ll be using the hashtag #AOBA20.

5 Trends from Acquire or Be Acquired 2019

WASHINGTON, DC — To get a sense of what trended at Bank Director’s 25th annual Acquire or Be Acquired conference, here’s a link to five video check-ins.  All 2 minutes or less in length, these summarize various topics and trends shared with 1,300+ attendees.

fullsizeoutput_1b40

 

SAVE THE DATE:

Acquire or Be Acquired Conference
January 26-28, 2020 | Arizona Biltmore Resort | Phoenix, AZ

For early-bird registration, please click here.

Daily Briefing: Sunday at Acquire or Be Acquired

PHOENIX — When Bank Director first introduced our Acquire or Be Acquired Conference 25 years ago, some 15,000 banks operated in the United States. While that number has shrunk considerably — there are 5,120 banks today — the inverse holds true for the importance of this annual event. What follows are two short videos from our first day in the desert that surface a few key ideas shared with our 1,300+ attendees.

Three Interesting Stats:

  1. Of the 5,120 banks in the U.S., 4,631 are under $1Bn in asset size and 489 are over that amount.
  2. Two years ago, we talked about the sweet spot of banking being banks between $5B and $10B in asset size; now, its those with assets of $50B+.
  3. Digital channels drive 35% of primary banking relationship moves, while branches drive only 26%.

_ _ _

  • Whether you are able to join us in person or are simply interested in following the conference conversations via our social channels, I invite you to follow @AlDominick @BankDirector and @Fin_X_Tech on Twitter. Search & follow #AOBA19 to see what is being shared with and by our attendees.
  • Everything You Need to Know About 2019’s Acquire or Be Acquired Conference

    WASHINGTON, DC — So, there’s this guy named Warren Buffet who has a few thoughts on business. This Nebraska-based investor once opined “I’d rather pay a fair price for a wonderful company than a wonderful price for a fair company.”  Quite sagacious — and appropriate to share in advance of our 25th annual Acquire or Be Acquired Conference which takes place January 27-29 at the JW Marriott Phoenix Desert Ridge in Arizona.

    Since we last hit the desert, several regional banks have been active in the M&A market — and may continue to look for merger opportunities to build up scale. In addition, we’ve seen how tax reform had a big impact on the industry, with many making investments to grow their business.

    Now, with the government shutdown straining our economy, big banks beating community banks on the digital front and shifting team & cultural dynamics, we have a lot of ground to cover over two-and-a-half days. Interested to see what we have planned? Take a look at the full agenda.

    While I am excited to reconnect with quite a few folks, I am particularly interested in a number of strategic issues that will be discussed. For instance:

    1. Since the stock market doesn’t always reward longer-term thinking, what does a bank’s CEO needs to focus on, especially with many stocks being valued as if a recession is imminent;
    2. How can regional and local banks boost their deposits given the biggest banks 2018 deposit gather successes;
    3. How laggards to the digital movement can catch up with their peers? (One suggestion: take a look at Finxact, a “Tesla-like” financial technology company that offers an innovative, open-core banking platform. I believe it will quickly become a legitimate challenger to FIS, Jack Henry and Fiserv);
    4. The M&A outlook for 2019;
    5. How institutions can gain/acquire/rent the skills needed to vet and negotiate with potential FinTech partners;
    6. When we might see IPOs — realizing the SEC has to re-open before this occurs; and
    7. How many new bank applications will be approved by the FDIC, realizing that 14 were last year.

    For those joining us in Arizona, I encourage men to bring a sports coat or a jacket for the evenings as we plan to be outside for our receptions and the desert quickly cools off once the sun sets. In addition, the rumors of people being in their seats at 7:15 – 7:30 on Sunday morning? 100% true. We start at 7:45 AM and there are quite a few pictures from last January’s event if you need visual proof.

    Finally, the digital materials for the conference can be found on BankDirector.com. Once you register on-site, you’ll be given a passcode to access the materials that can be used throughout the event.

    _ _ _

    Whether you are able to join us in person or are simply interested in following the conference conversations via our social channels, I invite you to follow @AlDominick @BankDirector and @Fin_X_Tech on Twitter. Search & follow #AOBA19 to see what is being shared with and by our attendees. If you are going to be with us in Arizona and we’re not already connected here on LinkedIn, drop me a note and let’s fix that.

    On the Horizon for Bank CEOs, Their Leadership Teams and Boards

    WASHINGTON, DC — Can community banks out-compete JP Morgan, BofA and Wells Fargo?  This is the elephant in the room awaiting 853 bank executives and board members — representing 432 Banks — at our upcoming Acquire or Be Acquired Conference.  The lights don’t officially come up on our 25th annual event at the JW Marriott Phoenix Desert Ridge until Sunday, January 27.  So in advance, three big questions I anticipate fielding in the desert.

    Does 2019 Become the Year of BigTech?

    As noted by H2 Ventures and KPMG, Amazon is providing payment services and loans to merchants on its platform, while Facebook recently secured an electronic money licence in Ireland.  Alibaba, Baidu and Tencent have become dominant operators in China’s $5.5 trillion payments industry.  Add in Fiserv’s recent $22B acquisition of First Data and Plaid’s of Quovo and we might be seeing the start of a consolidation trend in the financial technology sector.  Will such investments and tie-ups draw the attention of big technology companies to the financial services industry?

    Has the window to sell your bank already closed?

    When I heard the rumor that BBVA might be buying UK-based Atom Bank — one of the proverbial European challenger banks — I started to look at acquisition trends here in the U.S.  Case-in-point, we put together the following graphic in December for BankDirector.com

    ma-infographic-final_1

    We know that some community banks have been holding out hopes of higher pricing multiples or for a strategic partner.  These institutions might find the window of opportunity to stage an exit isn’t as open as it was just a few years ago. This doesn’t mean the window has shut — but I do think an honest assessment of what’s realistic, at the board level, is appropriate.

    Wither the bond market?

    A NY Times op-ed piece  posits that the bond market reveals growing cracks in the financial system.  Authored by Sheila Bair, the former chairwoman of the FDIC, and Gaurav Vasisht, director of financial regulation at the Volcker Alliance, it warns that “regulators are not doing enough to make sure that banks are prepared.”  While the duo calls for thicker capital cushions for big banks and tighter leveraged loan underwriting standards, I wonder how executives joining us in Arizona feel about this potential threat to our economy?
    _ _ _

    As the premier bank M&A event for bank CEOs, senior management and board members, Bank Director’s 25th annual Acquire or Be Acquired Conference brings together key bank leaders from across the country to explore merger & acquisition strategies and financial growth opportunities. If you’re joining us in the desert, I’ll share a few FYIs later this week. If you’re unable to join us in Phoenix, AZ, I’ll be tweeting from @aldominick and using #AOBA19 when sharing on social platforms like LinkedIn.

    An Optimist’s Dilemma

    WASHINGTON, DC — At this time two years ago, optimism swept across the banking sector.  The change in administration gave us a steepened yield curve.  Investors predicted improved economic growth.  Many anticipated regulatory relief and the prospect of major corporate tax cuts.

    The future of banking looked promising.

    Now, pragmatism has worn that luster. Many have concerns about the growing divide between the biggest banks and everyone else. Throughout 2018, moderate loan and dull deposit growth proved persistent themes for banks.

    The future appears far more challenging.

    As the year winds down, I find the cyclical nature of banking of particular interest. While an optimist by nature, I fear we’re entering a harder operating environment.

    • We’re getting closer to a turn in the credit cycle.
    • We saw investors bail on bank stocks in October.
    • We see big banks closing rural and suburban branches—opting for digital services instead.

    Against this backdrop, I take some comfort in a new book by Dorris Kearns Goodwin, “Leadership in Turbulent Times.”  Goodwin provides anecdotes about controlling negative emotions, like President Abraham Lincoln’s “hot letters”—his own missives of his frustrations he then put aside, hoping he’d never have to send what he’d written.

    Leadership in Turbulent Times

    So in that spirit, consider this my “Lincoln letter” to a bank’s CEO and board, albeit with an optimist’s take.

    Please pay attention to the vast amounts being spent on digital advertising.
    The Interactive Advertising Bureau (IAB) and PwC estimate U.S. digital ad spending will hit $100 billion by year-end. This number might shock those thinking about where and how they want to tell their bank’s story through videos, social media and other digital means. Nonetheless, considering what’s being spent to court the attention of your “loyal” constituents might spark new ideas for where to invest time and effort.

    When thinking tech, intertwine conversations about talent.
    With venture capitalists still pouring money into startups offering basic banking services, potential employees have even more options to spend their energy and creativity. For any bank, the demand for the talent needed to deliver new digital capabilities will significantly outpace the available labor pool. If you don’t have a team now, I worry your bank might be challenged to successfully create meaningful technology partnerships.

    Culture is eating strategy (and new initiatives) for breakfast, lunch and dinner.
    Many executives have talked with me about how they’re working hard to ensure the bank’s existing culture keeps pace with the evolution of the industry. We all deal with execution risk—but as that old saying goes, if all you ever do is all you’ve ever done, then all you’ll ever get is all you’ve ever gotten.

    Windows of opportunity most certainly exist.  What those windows are, and how long they remain open, remains a moving target — one we intend to focus on next month at our 25th annual Acquire or Be Acquired Conference, Jan. 27-29 at the JW Marriott Phoenix Desert Ridge in Phoenix, Arizona.

    *This first ran in Bank Director’s weekly newsletter, The Slant, on December 8.

    An Early Look at the 2019 Acquire or Be Acquired Conference

    Quickly:

    • Bank Director’s 2019 Acquire or Be Acquired Conference takes place next January 27 – 29 at the JW Marriott Phoenix Desert Ridge in Phoenix, AZ.  To register, click here.

    WASHINGTON, DC — As the last few hours of July tick by, our team continues to build towards next winter(!) and the premier bank M&A event for CEOs, senior management and board members: Bank Director’s annual Acquire or Be Acquired Conference. This special event brings together key bank leaders from across the country to explore merger & acquisition strategies, consolidation trends and financial growth opportunities.

    Earlier this year, we welcomed 1,200+ to the Arizona desert — and anticipate a similar audience when we return a week before next year’s Super Bowl. We’ve recently added a lot of new information on January’s program to BankDirector.com; if you’re interested to see what we’re planning, I invite you to take a look.

    cropped-img_0548.jpg

    In addition to Acquire or Be Acquired, I am really excited to host two conferences before we return to the desert.  On September 10-11 at the Four Seasons Hotel Chicago, we host our very popular Bank Board Training Forum.  This two-day program provides bank directors with the education and training needed to address the issues and challenges facing them in today’s ever competitive, highly regulated and rapidly evolving banking and financial services industry.

    From November 5 – 7, at the Four Seasons Resort & Club Dallas at Las Colinas (a short hop from DFW airport), we convene Bank Director’s annual Bank Compensation & Talent Conference to focus on the recruitment, development and compensation of a bank’s most essential talent.  While in Dallas, leading advisers share their perspectives on building and supporting the best teams by providing first-hand information on the strategies and plans being used by successful banks today.

    If you’re interested in any of these three exceptional programs, you can learn more here.

    The Intersection of Ideas and Opportunities

    Quickly:

    • In a few days, the lights come up on the annual FinXTech Summit, a program that explores ways for banks to delight customers, generate top-line growth and enhance bottom-line profits through partnerships and investments in technology companies.

    PHOENIX — When I last stepped foot in Arizona, it was to host Bank Director’s annual Acquire or Be Acquired Conference.  The January event attracts a hugely influential audience focused on mergers, acquisitions and growth strategies & tactics.  While there, we noticed quite a few presentations explored how and where financial institutions might invest in, or better integrate, digital opportunities.  So, as a complement to Acquire or Be Acquired, I’m back in the desert to dive deeper into myriad ideas for banks to improve profitability and efficiency with the help of technology firms.

    As we prepare to host our FinXTech Annual Summit at the Phoenician, take note: smart banks are investing and/or partnering with technology companies because they realize it’s cheaper and faster than building something themselves.  Further, the largest banks in the U.S. are rapidly evolving with advances in artificial intelligence across chatbots, robo-advisors, claims, underwriting, IoT and soon blockchain — all of which add another layer of potential to further shake-up traditional business models.  In fact, there was a palatable sense among bankers at AOBA about the evolution in financial technology.

    Nonetheless, many banks, especially those between $500M and $30Bn in assets, are on the outside looking in — and this is where FinXTech’s Summit story begins.

    From exploring data to leveraging cognitive computing to gaining efficiencies in backroom processes, this year’s event surfaces a number of potent ideas.  For instance, we shine a light on how bank leadership can truly unleash the potential of a technology partner.  Further, we pull current quotes and issues like these to discuss and debate:

    One thing I love about customers is that they are divinely discontent. Their expectations are never static — they go up. It’s human nature. We didn’t ascend from our hunter-gatherer days by being satisfied. People have a voracious appetite for a better way, and yesterday’s ‘wow’ quickly becomes today’s ‘ordinary’
    Jeff Bezos, Founder and Chief Executive Officer

    Likewise, we share our takes on key acquisitions — like JP Morgan’s acquisition of WePay — while identifying how institutions leverage newer technologies to improve efficiency ratios and in some cases, boost franchise valuations.

    In a sense, FinXTech’s Summit serves as our “in-person” bridge between banks and qualified technology companies.  For those joining us, we’ll touch on various products and services for security, data & analytics, infrastructure, lending, mobile banking, payments and regtech while convening an exceptionally senior audience of 200+.  Throughout the event, I’ll share my thoughts via Twitter, where I’m @AlDominick and using #FinXTech18.  Finally, I’ll author a daily update on this site with my observations from the conference.

    The Best of Bank Director’s 2018 Acquire Or Be Acquired Conference?

    Quickly:

    PHOENIX, AZ — Well, that was fun!  Bank Director’s Acquire or Be Acquired Conference wrapped up on Tuesday evening, and with the benefit of a day to reflect on a jammed-packed experience, a few personal highlights from our time at the Arizona Biltmore.

    Favorite tweets

    Favorite picture

    IMG_0518 2

    I am SO proud to work with such a great team that truly embodies our #1 core cultural value of helping to make other’s successful.

    Three timely (and paraphrased) comments

    When it comes to identifying banks to buy… core deposits are more important than loans — David Zalman, Chairman & CEO, Prosperity Bancshares Inc.

    Earnings accretion is answer 1,2,3,4 and 5 out of five possible answers to the question “what is most important in bank M&A” — Robert G. Sarver, Chairman & CEO, Western Alliance Bancorporation

    If you sell your bank for cash, you’re truly selling your bank.  If you sell your bank for stock, you’re really investing in another’s future — Bill Hickey, Principal, Co-Head, Investment Banking, Sandler O’Neill + Partners, L.P.

    Best comment (unintentional comedy)

    IMG_0607

    On Monday, during the Prioritizing Risk & Reward session that she moderated, our President, Mika Moser, brought the house down.  John Allison, the Chairman of Home BancShares just shared that he’d made a whole lot of millionaires at his bank when Mika deadpanned, “you gotta any available teller positions?”  Great stuff Mika!

    Is this really a case to partner with FinTechs?

    I’ve seen estimates that some 90% of FinTech startups will fail — for a variety of reasons (e.g. no one wants the product, cash shortage, etc).  So, when I do the math and consider that we have some 5,000 FinTechs looking to make it big, only 10% have a realistic chance. Out of these 500 or so companies, only the ones capable of consolidating and expanding across niches will acquire a significant enough footing in the market to ensure resilience and sustainable long-term growth. Banks, start your engines…

    Video Recaps

    In case you missed it, we shared a number of videos on BankDirector.com this week.  The page with all videos can be found here: The Pulse of Acquire or Be Acquired. To get a sense of what these short videos look like, here is an example from Sunday.

    _ _ _

    If you missed the daily recaps shared on LinkedIn, Twitter and BD.com, here is a thumbnail with all the videos created. To playback the conference conversations via our social channels, I invite you to take search #AOBA18 to see what was shared by our attendees.