Just as I did last year, I am taking a break from my regular Friday writing routine to highlight the last few days with our exceptional team. Admittedly, I try to keep the company stuff to a minimum on About That Ratio; however, I feel it is more-than-ok to pull the curtain back a bit and share my pride and enthusiasm for our dynamic team following our “four year” anniversary.
Yes, the Bank Director name/brand came into being in 1991; however, many of the relationships with our hugely influential audience are the result of our core leadership team’s efforts over the past four years. So as we celebrated our team’s four-year anniversary on Wednesday (I’ll explain below), I thought to share some pictures from our time together.
Atta Boy’s new friend
Decorations going up
Quite amused w/ the camera
Taking pride in our koozies
Lunch gets served
Deliciousness from Puckett’s Grocery of Leiper’s Fork
Bill’s retreat in Leiper’s Fork
Al fresco dining in TN
Celebrating our largest shareholder’s b-day
Kaitlyn, the horse whisperer
Bill takes Naomi out for a paddle
Why am I not surprised?
Confirming the winning team’s work (yes, Kaitlyn, we won)
The team’s 4 year celebration? Don’t ask (Leiper’s Fork, TN)
Robert in action
Following the sale of a sister company to the NYSE in 2010, we re-designed our entire business around the information needs of a bank’s leadership team and board. From a proverbial tiger-team of ten, we now boast a talented team of nineteen men and women that I’m proud to work alongside. Of particular note, congratulations to Joan Susie, one of the co-founders of the company, who takes over the role of Chairman from our largest shareholder, Bill King. Bill also deserves more than just a tip-of-the-cap for inviting us down to his farm in Leiper’s Fork. Finally, a BIG-time thank you to everyone for helping with yesterday’s office clear-out. Demolition begins on our new office space next week!
Taking a run on this beach inspired me to draft a calendar for upcoming About That Ratio posts. Yes, the quiet beauty of this sunrise in Tulum, Mexico sparked an unexpected rush of ideas for sharing observations and insight on this site. Rather than keep those plans quiet, today’s piece provides some context for the coming months activity. As I did last year, I do intend to post a “tip sheet” every Friday morning by 8 AM ET. In addition, I will continue to share my thoughts from the various conferences I attend and participate in (regardless of day or time). That said, I’m open to suggestions about when and how often to present my take on trends and topics impacting financial institutions. Feel free to leave a comment below or DM me on twitter (@aldominick). (1) While on vacation, I read “Cracking the Code: The Winning Ryder Cup Strategy” by Paul Azinger and Dr Ron Braund. In it, the two write that “great challenges open the door for even greater innovation.” While writing a column is, at times, a labor of love, I am eager to build upon my efforts in 2013. I went back through my posts and found my favorite ones reflected on anecdotes picked up while meeting business and banking leaders from all parts of the country. For this reason, I anticipate many of my 2014 pieces being shaped by what I see, hear and learn while out on the road. Fortunately, I am slated to be in Nashville, New York City, Phoenix, Dallas, San Francisco, Los Angeles and Chicago before the weather warms up… and calling D.C. home affords me numerous opportunities to pass along thoughts from inside the beltway.
(2) I write this blog for bankers first, and executives that support banks second. While I’m fortunate to meet with officers and/or directors from financial institutions, I deliberately write for a broader audience. Essentially, anyone that works with or for a financial institution that cares about “the tone at the top.” For this reason, I will continue to share trends, topics and themes from a number of conferences this year. For example, Bank Director’s Acquire or Be Acquired conference at the Arizona Biltmore this month and May’s Growth Conference at the Ritz-Carlton New Orleans. Being that these particular events bring together CEOs, CFOs, Chairmen, board members and key officers from across the country, I doubt I will be at a loss for ideas or inspiration. Its not just our company’s events I’ll check in from. There are a number of programs held throughout the year that provide insight and inspiration to bank executives that I’ll share too.
(3) To keep things fresh and ground in fact, I will share research summaries from various organizations. To get out from the numbers and into the clouds, I am inviting guest authors to write a piece(s) on what they are seeing and thinking about. In addition, I’ll begin reaching out to bank CEOs to ask for their thoughts on various topics like cyber security risk while inviting executives from various professional services firms for their take on matters that range from financial services technologies to valuing a bank to compensation matters. A lot of ground to cover, a lot of fun to be had. Yes, I’m quite excited for this year’s About That Ratio!
I am taking a break from my regular routine of sharing three things I heard, talked about, learned or read to highlight my last few days at work. Admittedly, I try to keep the company stuff to a minimum on About That Ratio; today, I feel it is ok to pull the curtain back a bit and share my pride and enthusiasm for our dynamic team at Bank Director.
Ours is a successful small business, one composed of entrepreneurs and hard workers. Today, CEOs, CFOs, General Counsels, Presidents, Chairmen and board members of financial institutions nationwide rely on our digital offerings, conferences, research reports, educational programs and Bank Director magazine to keep pace with an ever-changing business landscape. Yes, we’ve been in business since 1991; however, our relationships with this hugely influential audience didn’t materialize overnight. In fact, the past 36 months have driven much of our financial and reputational growth. So as we celebrated our team’s three-year anniversary on Wednesday (I’ll explain below), I thought to share some thoughts and pictures this morning.
(1) For the Bank Director brand, a big change occurred in mid-2010, when our founder and Chairman sold our sister company, Corporate Board Member, to the NYSE. Concomitant to that transaction, he began to assemble a team to “modernize” the Bank Director franchise. This included a new website, new logo and company color scheme, new events, new editorial features, new data, new research, new sales efforts, new marketing campaigns, new PR efforts, and so on and so on. So it was with real pride that our team of 17 strong celebrated what we’ve done over the past three years to re-build, re-imagine and re-position our company as the information resource for leaders throughout the financial community.
(2) While we work hard, we do play well together. From snuggies in the office to orange flair being worn at our events, our company’s personality is a fun and creative one. This was on full display as we laughed it up on Tuesday. Here are a few fun, SFW pictures that show the lighter side of our crew, both in our Brentwood, Tennessee office and “down the road” at Arrington Vineyards.
Hmm… I wonder who else will have orange Bonobos pants on today
Kelsey + Joan taking a moment
2nd wave of wine tasting (Robert, Daniel, Jack, Dan, Mika, Michelle + random woman)
shocked that three people had to share 1 beer (Mika, Michelle and Kelsey)
No wine monsters here (Misty, Kelsey and Mika)… but the monster was out
Our fearless AssocPub, Kelsey Weaver
Our version of the conch, sported by our Managing Editor, Naomi
Winner, best tee shirt… c/o Shane
To beat down the pinata
Puffy Muffin to get folks in early
I think I’m properly attired… right Bill? And thanks for the hat!
Might be making this our 3rd office – does the move committee approve?
Shoes optional for Misty and me, stylish socks Robert!
Jake getting comfy
How’d that get in here?
(3) Finally, kudos to all those who preceded our team. While people come and go, our brand and reputation reflects many years of hard work and the collective efforts of many talented men and women. In addition, big thanks to companies like Circ (supporting our web and hosting needs), Robertson Design (for design), Data Marketing (in terms of fulfillment), Snapshot (videos), PrintWorks (prints materials for our conferences & reprints) and Grafix Solutions (business cards) for helping us look good!
While change is a constant, it is impressive to look back to the very first issue of the magazine and see how far we’ve come. I’ve shared this proverb before (and will most likely do so again): “If you want to go fast, go alone. If you want to go far, go together.” Appropriate for how we got here today… and how we aspire to grow in the future.
With trips this week to St Louis, Nashville and New York City in the rear-view mirror, forgive me for asking: is it Friday yet? While AA and Amtrak earned my business, it’s the following points that stick out from the week that was:
As I’ve written, quite a few banks continue to shy away from social media tools like Twitter, LinkedIn and Facebook. Well guess what. The SEC said its ok to use ’em to disseminate material information without running afoul of their fair disclosure rule (Reg FD). So I wonder how many public banks — Bank Director counts 487 in its database — will start to announce key information on sites like these and subsequently embrace this medium to engage with investors and consumers alike?
I was in the Keefe, Bruyette & Woods’ midtown offices yesterday morning. Fortuitous to be there talking M&A as the Provident New York merger with Sterling Bancorp had been announced just hours earlier. As the firm advised Sterling on the $344 million stock-for-stock deal, I left their offices wondering why more transformational deals that have strategic, and not just financial, value like this one aren’t being struck. One thought: a CEO wants to sell at a realistic price but has to overcome a reluctant investor base that comprises the majority of the board. I’m interested in other perspectives, and welcome your comments below.
Finally, TD bank’s CEO announced his retirement earlier this week, about a month after PNC’s CEO, James Rohr, did the same. While these decisions certainly remind us of the need for clear succession plans (both banks appear to have handled things seamlessly), it is Mr. Rohr’s comments about cyber security as he winds down his leadership of the bank that struck a nerve. While he could have been talking about the viability of banks under $1bn in asset size to compete, when asked what he thinks of too big to fail, he answered “I’m more concerned about too small to protect yourself… Because what’s happening with the denial of service stuff is it’s moving downstream to small banks who are going to be less capable of defending themselves.” Scary words from someone who is in the know.
A somewhat abbreviated Friday Follow-inspired post (coming to you from the great state of Missouri). On this Good Friday, I’m keeping things simple and sharing “just” three things I learned this week.
Of the news this week, Senator Tim Johnson’s announcement that he will not seek re-election in 2014 is especially noteworthy. Why? Well, the Democrat from South Dakota chairs the powerful Senate Banking Committee. His departure, according to this report from the Wall Street Journal, sets the stage for a hotly contested race to succeed him. This should interest many bank executives; “while he is regarded as sympathetic to the concerns of financial firms that operate in his home state, including community banks, Mr. Johnson has also fought GOP attempts to roll back or water down portions of the Dodd-Frank financial overhaul law.” I wonder if the next chair will push for legislation to breakup the big banks as the committee has discussed? As you can read in the American Banker (subscription required), guessing has already begun.
While I’d like to move off the topic of legislation and regulation, our own Chairman forwarded a client alert from the law firm of Goodwin Procter that kept my attention on rules and procedures. The title, Nasdaq Proposes Rule Requiring Internal Audit Function at All Listed Companies, says a lot. As you dig in, you’ll see this would go into effect by year-end. From a bankers point-of-view, financial institutions that are publicly traded already face the pressure of doing more with fewer resources. Every business function, including internal audit, is expected to bring value to an institution. So, much like the Senator’s announcement, this proposed rule is one to watch.
Finally, on the payments front, there’s been a lot of talk about the mobile consumer and his/her mobile wallet. For example, how Google Wallet poses a threat to big banks that make $$ off of card products. Yes, mobile devices have increasingly become tools that consumers use for banking, payments, budgeting and shopping. However, in this WSJ article (Consumer Using Phones to Bank, but Not Buy) we’re told “Americans are increasingly using their phones to avoid a trip to the bank, but they still have little interest in having mobile devices replace their wallets.” The piece builds on the results of a Federal Reserve survey released on Wednesday. The Fed finds the adoption of various tools isn’t as robust as one might be led to believe. If you have the time, it might be worth downloading the Fed’s results.
While I continue to get my proverbial legs under me here, I don’t want to forget some of the pieces I wrote for my DCSpring21 blog. Being that Twitter is pulling the plug on the blogging platform I’ve used to publish my thoughts since 2008 (adios Posterous), I’m going back through the 352 posts I shared to see what’s worth saving. One, from last November, resulted from a weekend trip to Petaluma, CA. I thought it an appropriate share as I enjoy a super hoppy Maximus.
So I found myself in Sonoma late Saturday afternoon. Little did I suspect, as I walked through a brewery tour at the purveyors of my favorite beers (the wicked awesome Lagunitas Brewing Company), that I’d come away with some business inspiration. But from one small business to another, cheers to the great folks behind Brown Shugga, IPA Maximus, Hop Stoopid Ale and the greatest named holiday beer of all time, Lagunitas Sucks.
As evidenced by the picture above, I enjoyed a taste or two of the good stuff. I also found myself scribbling down some takeaways. Specifically, my take on how they built their brand and reputation. I believe it applies to most all businesses:
You need character — and characters — to be successful & memorable;
Know your business — and be proud of the past and passionate about the future;
Tell a good story (or two, or three);
Be serious, but don’t take yourself too seriously; and
Don’t be shy about being the best.
So refreshing, in both senses, to spend an evening in Sonoma County. If you have a chance to head up to the brewery, a tour led by Louis comes highly recommended.
A pop quiz for you Laganitas lovers:
Q: Wilco Tango Foxtrot – does it make you smirk/smile?
Q: Why is 420 on the labels?
Q: What is censored — and what rapper’s 90’s CD caused the label flap?
Well what do you know. On Wednesday, D.C.’s “snowquester” came in like a lion and left, sadly, like a lamb. So what do we have to hang our hat on this week? Well, the Federal Reserve did release its stress test results for the country’s largest banks yesterday afternoon. Interesting enough to make today’s week-in-review? Take a read through these three stories that I read/watched/heard to find out.
While I wasn’t in my hometown of Boston, MA to hear this first hand, I have it on good authority that a number of the bankers presenting at KBW’s regional bank conference two weeks ago spoke on our country’s rapid move towards energy independence — and on the real economic growth they are seeing in their regions as a result. If you’re interested, this equity research note (FSW Energy and the Regional Banks), authored by Keefe’s Fred Cannon, is definitely worth a read.
Juxtaposing energy needs with banking services reminded me of a “debate” between three bank analysts, including Fred, that centered on comparing banks to utility companies. Building off those perspectives, I found myself talking with John Eggemeyer (the co-Founder & Managing Principal @ Castle Creek Capital) last Friday afternoon about this very thing. While it didn’t make it into last week’s post, his hypothesis that the financial community bares all the characteristics of a mature industry sent me searching for white papers I worked on while in business school. John saved me some of the trouble by reminding me that banking follows a historic pattern of other mature industries (e.g. dealing with excess capacity; which, as a consequence, leads to fierce competition for business). My big takeaway from our conversation: price, not customer service, proves the ultimate differentiator.
Finally, as John and I talked about what bankers might learn based on the commoditization of businesses, I couldn’t help but think about M&A and organic growth. This leads me to my third point. The Washington Business Journal recently recognized the top 5 D.C.-area banks based on total return on assets. In the piece, authored by Bryant Ruiz Switzky, the area’s 37 local banks posted a median annual profit of $3.5 million in 2012. That’s up 44% from 2011. Yes, many rankings like this focus on growth in terms of ROA; personally, I’m also keen to look at earnings growth. Nonetheless, some strong banks on this list… with many more making some real strides here in our Nation’s Capital.
As a bonus, a tip of the cap to an American Banker piece on the hows and whys BankUnited’s private-equity backers are giving up a big chunk of their stakes in the $12.2 billion-asset bank. While a subscription is required to read yesterday’s “BankUnited to Strengthen M&A Buying Power After Stock Offering,” I think its worth considering the short and longer-term views on what reduced private-equity interest might mean to a bank like this one.
Summary: Yes, it’s snowing in the DMV… no, this picture of the White House doesn’t capture today’s totals just yet. Nonetheless, the run on gas, food and firewood started early yesterday. So what better time to post something new to About That Ratio than with the snow coming down and the power and wi-fi still on?
I’ve already touched on “Rebooting the Bank;” with today’s piece, I’m taking a look at “rebooting the branch.” Whereas Brett King inspired my previous entry, credit for today’s falls to PwC.
Recently, I’ve had the chance to talk with several of the firm’s partners about the rise of the digitally driven consumer and commensurate high-cost infrastructure of physical banking locations. I believe we’re in agreement that if the branch model stays on its current course, it will become a financial burden to banks; ultimately, cutting deep into cross-channel profitability. So today, I thought to share some information produced by PwC that looks at reinventing branch banking in a multi-channel, global environment.
Yes, the branch of the future has a critical place in banks’ overall channel strategy. However, in its December “FS Viewpoint,” the professional services firm cites the cost of a branch transaction being approximately 20x higher than a mobile transaction… and more than 40x higher than an online one. Consequently, banks are beginning to adopt a mix of the following five branch models in order to compete and improve their ROI:
Assisted self-service branches that cater to retail and small-business customers on the go with high-function kiosks;
In-store and corporate branches; for example, in grocery stores and corporate office buildings;
Full-service branches that provide one-stop banking (sales and service) to retail and small-business customers who prefer privacy and face-to-face interactions;
Community centers that have a smaller footprint than traditional branches; and
Flagship stores that deliver sales and advisory expertise while showcasing emerging capabilities to sophisticated customers.
The logic behind a mixed approach? It increases the bank’s geographic relevance to consumers and balances customer needs, revenue opportunities and cost to achieve growth.
Anecdotally, I’ve recently talked with two CEOs, Ray Davis from Umpqua and Stephen Steinour from Huntington, about their branching strategies in advance of keynote speeches they’ve made at our Acquire or Be Acquired and Lending conferences. It strikes me that when banks like theirs assess a prospective branching opportunity, they deliberate on things like:
How do you develop specific financial criteria for measuring branch performance;
How do you decide whether the best path to building customers is adding branches, or operating with a more centralized marketing strategy; and
What are the advantages — and potential pitfalls — of growing a branch network.
So as the snow continues to fall outside, I’m digging deeper into PwC’s perspectives. As a “bonus” to the white paper referenced about, let me also share a video from the firm “Look Before You Leap: Analyze Customer and Business Impact Carefully Before Implementing Product Change.” While the title is a mouthful, the message, pretty succinct.
Below are three stories related to the financial community that I read/watched/heard this week… An added bonus? After this sentence, About That Ratio is 100% free of any mention of today’s nonsensical sequester.
(1) So, the IPO market for banks is ringing? This week, McKinney, Texas-based Independent Bank Group (the parent of Independent Bank) went loud with its plans to raise up to $92 million in an initial public offering. The bank plans to use the proceeds from the IPO to, surprise, surprise, repay debt, shore up its capital ratios for growth & acquisitions and for working capital. This filing comes only a few weeks after ConnectOne in NJ (CNOB) closed its previously announced offering of 1.6M shares of common stock @ $28/share. Good to see…
(2)… and with Independent Bank’s news, now might be time to take a read through this brief overview of the JOBS Act put out by the attorneys at MoFo. Why? A centrepiece of the Act is its new IPO on-ramp approach…
(3) On the non-IPO tip, check out this cool/intuitive infographics for tech trends posted by NASDAQ to its Facebook page yesterday afternoon. Who said social media + banks ain’t quite as simpatico as they might be…
Now that I’ve baited you with the headline, let me tie it to the opinions of Brett King (who, in full disclosure, we just confirmed as a speaker at Bank Director’s upcoming Growth conference at the Ritz-Carlton in New Orleans).
A history lesson for those non-Bostonians reading today’s post. Shawmut Bank was established in Boston in 1836 and its logo, the stylized bust of Chief Obbatinewat — seen above — became widely recognizable in the Greater Boston area over the next 150 years. Heck, we had one in our house! Sadly, the name and logo were retired in 1995 as a result of the merger of Shawmut and Fleet. But for me — and many others I’ve met (hello Bank of the West’s CEO) — “the Chief” still inspires a smile and a story.
In my last post, I wrote that its not easy for a bank to build a strong brand. Still, as some are finding, the rewards can be immense. So I bring up “the Chief” (not to be confused with the equally awesome Robert Parish who dominated the paint for the Boston Celtics) as an example of a formerly strong brand that still stirs emotions and memories. It also provides a tie into what I’ve been reading of Brett’s in terms of building a “sticky” customer experience and developing a multi-channel distribution strategy.
Admittedly, his “BANK 2.0” book reminded me of many I read while in the IT space. For example, those authored by Clay Shirky; at least, in terms of crowdsourcing, “disruptive” customer behaviors, technology shifts and new business models. But as Brett focuses on our financial community, I’m eager to crack open his “BANK 3.0” to see what he thinks might redefine financial services and payments. I’m particularly interested in his POV with respect to:
Where social media might shine a light on pricing, processes and heretofore obtuse policies;
How “customer advocacy” is killing traditional brand marketing; and
The growth of the ‘de-banked’ consumer who might not need a bank at all.
I’m always interested in hearing who’s “doing it right” in order to learn and share their stories. So I ask: in addition to Brett’s ideas, any suggestions for other authors, entrepreneurs, innovators, etc. worth a follow/read? Hit me up on Twitter or feel free to leave a comment below. I’ll re-post later this week as part of my “Friday Follow” inspired column.
FWIW, the Growth Conference focuses on how a bank’s board can become actively involved in building the bank – in securing customers, identifying lending opportunities, promoting the bank in the community, etc. Its a complement to our annual M&A conference, Acquire or Be Acquired, which I covered in detail on my DCSpring21 blog last month.
In the spirit of Twitter’s #FridayFollow, here are three stories related to the financial community that I read/watched/heard this week:
(#1) If you were at Bank Director’s 19th annual Acquire or Be Acquired conference last month, you heard that declining net interest margins, loan growth and regulatory challenges are the top concerns for banking leaders. In the following video, Grant Thornton’s Nichole Jordan discusses these concerns and provides insight into what bank executives and members of a board might do about them.
(#2) While I live in Washington D.C., our company considers Nashville home. In the shadows of Union Station, Avenue Bank maintains its oh-so-cool headquarters. I met with our “neighbor’s” President & COO yesterday afternoon and wound up talking about quite a few things. SEC sports, the upcoming Masters, branding (that’s their hummingbird below) and gasp(!), even a bit of banking.
When I asked if he’d read this cover story in Wednesday’s Wall Street Journal (“Business Loans Flood the Market“) about more banks competing for lending opportunities, he said he hadn’t. But, he did have good reason: he’d been talking about that very thing in Knoxville (at UT’s business school) the night before. While a subscription is required, the story lays out how banks are putting “their liquidity to work, but added competition puts pressure on rates and elevates risk.”
(#3) Finally, I receive a number of insightful research reports and newsletters. One of the better ones, IMHO, comes from Clark Street Capital. Each week, the Chicago-based firm shares its perspectives on banking, real estate, and the debt and loan sale markets. Worth a sign up.
So about the name of my new, banking-focused blog: it flies in the face of the so-called “Texas ratio” that originally inspired it. If you’re not familiar with this ratio, it measures a bank’s credit troubles. Simply put, the higher one’s Texas ratio, the more severe the bank’s credit troubles. According to the Dallas Fed:
Bankers, particularly those in Texas, cringe at any reference to the Texas ratio. Of all the metrics used in finance, the Texas ratio is among the most feared because it can be used as an early warning signal to identify financial institutions at greatest risk of failure…
By design, this site will explore issues and opportunities relevant to key leadership throughout our financial community. So, I felt the title fits with a wink and a nod to my focus and interests.
You see, I’m bullish on the future of banking. While some want to criticize and harp on things like a Texas ratio (which, truth be told, should be renamed to reflect recent challenges in Georgia or Florida), I’m keen to explore the many ways banks continue to support our neighborhoods and communities as they grow through acquisition or innovative new strategies and/or tactics.
Make no mistake: the risk & compliance sides of banking will take a secondary position to how banks deliver value to their customers, communities and shareholders. As I spend a lot of time talking with bank executives and board members + leaders at those companies providing services and support to FIs, I intend to pass along some of what I’m seeing, learning and thinking on a weekly basis. But for now, “ciao, ciao,” and thanks for checking out my latest writing venture!