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.

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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%.

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  • 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.
  • 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

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    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?
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    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 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.

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    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 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

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    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)

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    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.

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    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.

    10 Questions I Plan To Ask During Acquire Or Be Acquired

    Quickly:

    • Despite improving economic conditions, the business of banking remains difficult.

    By Al Dominick, CEO of DirectorCorps — parent co. to Bank Director & FinXTech.

    PHOENIX, AZ — For all the talk of bank consolidation, there are still 5,700+ banks in the United States.  But let’s not kid ourselves.  For many community banks today, earnings pressures + regulatory and compliance costs + the continued impact of technology = a recurring challenge.

    While the number of banks in business will inevitably shrink over the next 10 years — perhaps being cut in half — I remain bullish on the overall future of this industry. If December’s tax reform spurs capital spending and job creation by small- and medium-sized businesses, many of the banks joining us here in Arizona stand to benefit. But will the recent tax cut induce companies to invest more than they already planned to? This is but one of a number of questions I look forward to asking on stage through the first day of Bank Director’s Acquire or Be Acquired Conference.

    Below, ten more questions I anticipate asking:

    1. Are FinTechs the industry’s new de novos?
    2. What does it mean that the banking world is deposit rich yet asset poor?
    3. Why are certain credit unions thinking about about buying banks?
    4. In terms of technology spending levels, where are dollars being earmarked and/or spent?
    5. With respect to small business lending, do credit unions or FinTechs pose a more immediate challenge to community banks?
    6. What is an appropriate efficiency ratio for a bank today?
    7. Will big M&A buyers get back in the game this year?
    8. What are some of the critical items in due diligence that are under appreciated?
    9. What does an activist investor look for in a bank?
    10. Is voice recognition the next huge source of growth for banks?

    We have an exciting — and full day — coming up at the Arizona Biltmore. To keep track of the conversations via Twitter, I invite you to follow @AlDominick @BankDirector and @Fin_X_Tech.  In addition, to see all that is shared with (and by) our attendees, we’re using the conference hashtag #AOBA18.

    21 Reasons I Am Excited About Acquire or Be Acquired

    Quickly:

    • Making banking digital, personalized and in compliance with regulatory expectations remains an ongoing challenge for the financial industry. This is just one reason why a successful merger — or acquisition — involves more than just finding the right cultural match and negotiating a good deal.

    By Al Dominick, CEO of DirectorCorps — parent co. to Bank Director & FinXTech.

    PHOENIX, AZ — As the sun comes up on the Arizona Biltmore, I have a huge smile on my face. Indeed, our team is READY to host the premier financial growth event for bank CEOs, senior management and members of the board: Bank Director’s 24th annual Acquire or Be Acquired Conference. This exclusive event brings together key leaders from across the financial industry to explore merger & acquisition strategies, financial growth opportunities and emerging areas of potential collaboration.

    AOBA Demographics

    The festivities begin later today with a welcoming reception on the Biltmore’s main lawn for all 1,125 of our registered attendees.  But before my team starts to welcome people, let me share what I am looking forward to over the next 72 hours:

    1. Saying hello to as many of the 241 bank CEOs from banks HQ’d in 45 states as I can;
    2. Greeting 669 members of a bank’s board;
    3. Hosting 127 executives with C-level titles (e.g. CFO, CMO and CTO);
    4. Entertaining predictions related to pricing and consolidation trends;
    5. Hearing how a bank’s CEO & board establishes their pricing discipline;
    6. Confirming that banks with strong tangible book value multiples are dominating M&A;
    7. Listening to the approaches one might take to acquire a privately-held/closely-held institution;
    8. Learning how boards debate the size they need to be in the next five years;
    9. Engaging in conversations about aligning current talent with future growth aspirations;
    10. Juxtaposing economic expectations against the possibilities for de novos and IPOs in 2018;
    11. Getting smarter on the current operating environment for banks — and what it might become;
    12. Popping into Show ’n Tells that showcase models for cooperation between banks and FinTechs;
    13. Predicting the intersection of banking and technology with executives from companies like Salesforce, nCino and PrecisionLender;
    14. Noting the emerging opportunities available to banks vis-a-vis payments, data and analytics;
    15. Moderating this year’s Seidman Panel, one comprised of bank CEOs from Fifth Third, Cross River Bank and Southern Missouri Bancorp;
    16. Identifying due diligence pitfalls — and how to avoid them;
    17. Testing the assumption that buyers will continue to capitalize on the strength of their shares to meet seller pricing expectations to seal stock-driven deals;
    18. Showing how and where banks can invest in cloud-based software;
    19. Encouraging conversations about partnerships, collaboration and enablement;
    20. Addressing three primary risks facing banks — cyber, credit and market; and
    21. Welcoming so many exceptional speakers to the stage, starting with Tom Michaud, President & CEO of Keefe, Bruyette & Woods, Inc., a Stifel Company, tomorrow morning.

    For those of you interested in following the conference conversations via our social channels, I invite you to follow me on Twitter via @AlDominick, the host company, @BankDirector and our @Fin_X_Tech platform, and search & follow #AOBA18 to see what is being shared with (and by) our attendees.

    Three Things to Know About the Digital Delivery of Financial Products and Services

    Quickly:

    • Technology continues to reshape what it means to lead, to innovate and to offer in terms of financial goods and services.

    By Al Dominick, CEO of DirectorCorps — parent co. to Bank Director & FinXTech.

    WASHINGTON, DC — It is no secret that financial institutions are in a race to figure out how and where innovative technologies can help win and keep loyal customers, improve operational efficiencies and enhance their overall cyber-security measures.  While we might disagree on how fast changes will occur, can we all agree that the ever-expanding expectations for the digital delivery of products and services will dramatically impact banking’s future?

    I put this not-quite-rhetorical question out in advance of our annual Acquire or Be Acquired Conference at the Arizona Biltmore.  Indeed, the technological shifts taking place in this industry are significant, and I anticipate quite a few conversations about what our “digital future” might look like.  In the spirit of sharing information and ideas prior to this Sunday’s presentations, this video surfaces a few areas I think a bank’s board needs to pay closer attention to.

    If you’re interested in following conversations that focus on issues like these during Acquire or Be Acquired, I invite you to follow me on Twitter via @AlDominick, check out what the team shares through @BankDirector plus our @Fin_X_Tech platform and search & follow #AOBA18 to see what the social shares with (and by) our attendees.

    *This video — which is normally available only through our special bank membership program — foreshadows several presentations at Acquire or Be Acquired.  It also tees up our FinXTech Annual Summit.  Held the past few years at the NASDAQ’s MarketSite in NYC, we’ve partnered with Promontory Interfinancial Network to best explore opportunities to generate top line growth and bottom line profits through partnerships, collaboration and investments. Held at The Phoenician in Scottsdale, AZ on May 10th and 11th, I invite you to take a peek at the recently updated agenda.

    10 Banks and Fintechs Doing it Right

    In advance of April’s FinXtech Summit
    By Al Dominick, CEO of DirectorCorps (parent co. to Bank Director & FinXTech) | @aldominick

    Quickly:

    • An increasing number of financial institutions are using partnerships with technology companies to improve operations and better meet customer needs.
    • For the past few months, banks and/or fintechs submitted case studies on specific technology solutions helping financial institutions produce real, quantifiable results to our team at FinXTech.
    • With more then 100 submissions in hand, a committee of FinXTech advisors worked with our team to compile a top-10 list during Bank Director’s Acquire or Be Acquired Conference in Arizona last week.

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    Throughout Bank Director’s annual Acquire or Be Acquired conference, I found myself in quite a few conversations about the continually changing nature of financial services. Many of these discussions revolved around the possibilities generated by traditional institutions partnering with emerging technology firms.  Some of these took place on-stage; for instance, I opened the second full day of the conference by polling an audience of 900+ on a variety of technology-related issues:

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    With results like these precipitating editorial coverage from our team and attendees alike, you’ll probably understand why I find the just-released ten finalists for our “Best of FinXTech Awards” so compelling.  Indeed, as the financial landscape continues to evolve, and executives grapple with a fast-changing operating environment that requires partnerships and collaboration, each of these relationships shows what is really possible when leaders explore something new together.

    • Bank of Nova Scotia (Scotiabank) + Sensibill: Scotiabank’s customers can store, organize and retrieve paper and electronic receipts through the Toronto, Canada bank’s mobile banking app and wallet, the result of a partnership with Sensibill, also based in Toronto. The service was launched in October 2016.
    • Franklin Synergy Bank + Built Technologies, Inc.: Built Technologies, in Nashville, Tennessee, improved the loan administration process for Franklin Synergy Bank, in Franklin, Tennessee. The $3 billion asset bank now manages a greater number of construction loans with fewer staff.
    • Green Dot (Go Bank) + Uber: Pasadena, California-based Green Dot Corp., which issues prepaid credit cards, partnered with Uber to provide the San Francisco transportation company’s drivers a fee-free debit card and an instant pay solution that allows drivers to be paid instantly.
    • IDFC Bank + TATA Consultancy Services (TCS): Due to a regulatory mandate, India’s IDFC Bank had just 18 months to expand into rural areas to better serve unbanked customers. The bank’s partnership with TCS, based in Mumbai, India, included the use of micro ATMs, which are modified point-of-sale terminals that expand the bank’s reach in rural areas.
    • National Bank of Kansas City + Roostify: San Francisco-based Roostify improved National Bank of Kansas City’s formerly inefficient and incomplete digital mortgage application process. Customers at the bank, based in Overland Park, Kansas with more than $600 million in assets, can now fill out a mortgage application in a little as 20 minutes, with no need for a phone call or trip to the branch to visit a loan officer.
    • Somerset Trust Company + BOLTS Technologies: BOLTS, based in Bethlehem, Pennsylvania, improved the account opening process at Somerset Trust Company, saving the $1 billion asset community bank in Somerset, Pennsylvania, roughly $200,000 in the first year by better automating the process and reducing error rates. Customers can start and complete the process on multiple channels.
    • Toronto-Dominion Bank (TD Bank) + Moven: TD Bank, based in Toronto, Canada, launched a real-time money management application in April 2016, developed by Moven in New York.
    • USAA + Nuance: USAA, based in San Antonio, Texas, made its website a little smarter in 2016 with the virtual assistant Nina, which provides support for USAA’s members. This use of artificial intelligence is the result of a collaboration with Nuance in Burlington, Massachusetts.
    • Woodforest National Bank + PrecisionLender: Partnering with Charlotte, North Carolina-based PrecisionLender to improve its loan pricing strategy helped $4.8 billion asset Woodforest National Bank, in The Woodlands, Texas, grow commercial loans by 16 percent and gain almost 20 basis points in net interest margin.
    • WSFS Bank + LendKey: WSFS Financial Corp., headquartered in Wilmington, Delaware, with $6.6 billion in assets, partnered with the lending platform LendKey, in New York, to expand the bank’s consumer loan portfolio with a student loan and refinancing product.

    All ten of these partnerships demonstrate the strongest combination of collaboration and results.  For those interested, my colleague Kelsey Weaver (the President of our FinXTech platform) announces the three “winners” on April 26, 2017, during the FinXTech Annual Summit, at the Nasdaq MarketSite.

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    Closing bell ceremony at Nasdaq / Bank Director + FinXTech’s FinTech Day (March 1, 2016)

    In advance of that announcement, I invite you to follow me on Twitter via @AlDominick, FinXTech’s President, Kelsey Weaver @KelseyWeaverFXT, @BankDirector and our @Fin_X_Tech platform and/or check out where and how this annual Summit — and these awards — fits into FinTech Week New York that we are hosting along with Empire Startups starting April 24.

    A Look Back at AOBA: A Week in Pictures

    #AOBA17 – final conference intel
    By Al Dominick, CEO of DirectorCorps (aka Bank Director and FinXTech) | @aldominick

    Quickly:

    • 686 bankers comprised the 1,076 registered attendees — a figure that reflects the participation of 379 financial institutions.
    • 24 of our awesome team were on-site hosting this year’s event — all are celebrating what we affectionately refer to as “AOBA Day” by taking today off as a company holiday.

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    This has become something of a sharing tradition… a look back at a phenomenal week in Arizona.  New this year?  The welcome video we arranged to introduce our team to our guests on Sunday morning.

    As I shared in a Sunday afternoon post (Trending at Acquire or Be Acquired), the best way to understand this event’s popularity is to look at this picture from Sunday morning at 8:16 AM (e.g. one minute after I turned the stage over to our first speaker, the CEO of KBW, Tom Michaud).  Already, we had 900+ in their seats for this 2.5 day program.  Let me say that one more time… 900+ in their seats on a sunny Sunday Arizona morning.

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    So with that in mind, take a look at some of the photos shared by our on-site photographer, Keith Alstrin (Alstrin Photography).

    If you’re interested in what is being discussed for the present + future by some of the industry’s most influential executives, I invite you to follow me on Twitter via @AlDominick along with @BankDirector and its @Fin_X_Tech platform.  To take a further trip back and see what was being shared with (and by) our attendees at Acquire or Be Acquired, we encouraged the use of #AOBA17.  We are excited to do this again next year and hope you’ll save the date!!

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    Inspired by U.S. Bank’s CEO at Acquire or Be Acquired

    #AOBA17 conference intel (Monday/Tuesday)
    By Al Dominick, CEO of Bank Director | @aldominick

    Quickly

    • Most M&A activity will continue to take place among banks with assets between $1 billion and $10 billion.
    • For an acquirer, the level of underwriting for deposits can be more rigorous then underwriting for loans.  Indeed, because of BSA & AML concerns, it takes a high degree of effort to realistically measure the risk of buying “someone else’s cooking.”
    • This year’s keynote, Richard Davis, is the Chairman & CEO of U.S. Bank — which has $446 billion in assets.  FWIW, he started his career as a bank teller at Security Pacific Bank in Los Angeles on his 18th birthday.

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    Over the past decade, U.S. Bank’s consistent results made it, according to the Wall Street Journal, a darling with investors and analysts.  While impressive, their CEO’s perspectives on where we are now — and where we might be heading — inspired this short video recap.

    In addition to his remarks on building a great team, his perspectives on technology struck a real chord given my background (I worked at great technology company in Bethesda, MD for 6+ years).  Specifically, his encouragement to focus on:

    • Tokenization/EMV/mobile
    • Real time payments
    • Open APIs
    • Identity management
    • Distributed ledger / blockchain
    • Internet of things (IoT)
    • Machine learning

    In subsequent posts, I’ll elaborate on these issues.  But for those interested in following the conference conversations that are more M&A-oriented via our social channels, I invite you to follow me on Twitter via @AlDominick, the host company, @BankDirector and its @Fin_X_Tech platform, and search & follow #AOBA17 to see what is being shared with (and by) our attendees.

    Trending at Bank Director’s Acquire or Be Acquired Conference

    #AOBA17 conference intel (Sunday)
    By Al Dominick, CEO of Bank Director | @aldominick

    Quickly

    • We could see over 200 merger transactions despite a declining number of banks in 2017.
    • There is a clear trend on M&A pricing multiples being driven by bank profitability and asset quality.
    • For banks, too little capital is not the only issue — too much capital and the inability to produce sufficient returns on capital is equally problematic.

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    What is my bank worth?  How will the changing tax environment affect bank values?  When is the right time to buy (or sell) a bank?  What are the most significant factors affecting bank value?  These were just some of the questions surfaced this morning here in Arizona.  In this video recap of Sunday morning’s presentations at Bank Director’s Acquire or Be Acquired Conference, I share a few observations about the conversations taking place around issues such as these.

    Given the focus of this three-day event, I anticipate many subsequent presentations building off of these points.  For those interested in issues such as these, I invite you to follow me on Twitter via @AlDominick, the host company, @BankDirector and its @Fin_X_Tech platform, and search & follow #AOBA17 to see what is being shared with (and by) our attendees.