authored by Al Dominick since 2010
As we head into the final day of Acquire or Be Acquired, its clear to me that there are some great opportunities for community and regional banks to compete effectively and recapture market share in 2016.
*Thanks to our keynote speaker, J. Michael Shepherd, Chairman & CEO, Bank of the West and BancWest Corporation for inspiring today’s title and video.
Thanks to our keynote speaker, J. Michael Shepherd, pictured above. The Chairman & CEO, Bank of the West and BancWest Corporation, he inspired quite a few with both his wit and wisdom.
Over the past few days at Bank Director’s annual Acquire or Be Acquired conference, various speakers have touched on a number of key strategic growth issues. From exploring an acquisition to growing loans, controlling expenses to managing capital, the discussions hit the “timely and relevant” standard that we consider essential. They also reinforced my sense that more boards and their management teams are seriously considering an acquisition as their primary growth plan than at this time last year.
As our editor-in-chief opined, the heightened level of interest could certainly be explained by the continued margin pressure that banks have been operating under for the last several years. For those thinking about buying another, my short video recap from the mid-way point of AOBA offers a heads up about a pre-deal consideration not to be overlooked.
Throughout the first day of Bank Director’s 22nd annual Acquire or Be Acquired Conference, I found quite a few presentations focused on the emergence of mid-sized regional banks that are growing through the consolidation of smaller banks. Clearly, mergers & acquisitions provide an avenue for some banks to drive improved operating leverage, earnings, efficiency and scale. At the same time, the pressures prompting larger banks to innovate — sluggish loan demand, depressed revenue, higher compliance costs — are the same ones forcing smaller banks to pursue a sale.
By Al Dominick, President & CEO, Bank Director
For those unfamiliar with “AOBA,” this annual event explores issues like the one mentioned above. Since the conference kicked off at 8 AM on a Sunday, this morning’s post shares three short video recaps from my time at the Arizona Biltmore followed by links to recent posts specific to this conference.
In addition to these videos, below are links to four of my posts specific to the event:
If these types of conversations interest you, take a look at what we’re sharing on BankDirector.com. Additionally, I invite you to follow me on Twitter via @AlDominick, the host company, @BankDirector, and search & follow #AOBA16 to see what is being shared with (and by) the 930 men & women in attendance.
The fun began bright & early here at the Arizona Biltmore, home of this year’s Acquire or Be Acquired conference. This annual event explores a bank’s financial growth opportunities — and brings a significant number of bank CEOs, board members and C-level executives to the desert. In this short video, I share a few key take aways from this morning’s presentations specific to the challenges being faced by bank CEOs in attendance. Sorry, no mention of a flat yield curve (even though the interest rate environment certainly merits more then just this mention).
As we prepare to kick off this year’s Acquire or Be Acquired conference, I offer my take on one theme I anticipate being brought up early — and discussed often: the return of regional acquirers who are positioning themselves to challenge the true big guys in banking.
I planned to write about a number of banks I was excited to see this weekend at AOBA. But as Steve Jobs once shared “people don’t know what they want until you show it to them.” In this spirit, let me highlight nine banks that I anticipate our attendees will be talking about in Arizona at Bank Director’s annual M&A conference.
In a few minutes, I’ll hop an American flight to Phoenix for this year’s Acquire or Be Acquired Conference. Before I depart the cold and slush of D.C. for some warmth and sun in the desert, this is my take on the banks I anticipate people talking about when we’re all together:
By no means are these all of the banks that will come up in conversation; rather, those that are top of mind.
One final thought before hopping my flight west. The recent volatility in the stock market may be impacting institutions considering a capital raise, IPO or acquisition — but this week’s deal pace is far different then at this time in recent years. The patterns I’m beginning to see is a concentrated effort to get to over the $5Bn asset mark and into that sweetest of spots: the $5Bn to $50Bn asset class. A point I’ll elaborate on in an upcoming post/video.
So if you are interested in following the conference conversations via social channels, I invite you to follow me on Twitter via @AlDominick, the host company, @BankDirector, and search & follow #AOBA16 to see what is being shared with (and by) our attendees. Safe travels to those 930 men & women joining us this weekend!
You might think every bank CEO I meet wants to talk about buying another institution; truth-be-told, some recognize that tying up with another makes a lot of sense. So this post looks at why now may be the right time for a bank’s CEO and board to consider a sale. It plays off the idea that in many markets, organic growth options are limited and times are tough for banks, especially those under $1Bn in asset size.
By Al Dominick, President & CEO, Bank Director
Over the past three years, a number of bank executives and board members have struggled with whether to buy or sell their bank — or pursue growth independently. Over the same time, Bank Director has welcomed more than 1,300 bankers — from more than 500 financial institutions — to our annual M&A conference to explore their short- and long-term options.
This year, those numbers go up in a BIG way. Indeed, we have 600 bankers from 300+ banks joining us at the Arizona Biltmore for “AOBA” this upcoming Sunday through Tuesday. To me, this signals that more potential buyers & sellers are getting off the sidelines and into the bank merger and acquisition game. So in advance of Bank Director’s 22nd annual conference, here are five challenges that a bank’s CEO and board might want to consider.
Now, it has been said that business is not about longevity, it is about relevance. So as Bank Director’s team continues to gear up for this year’s Acquire or Be Acquired conference, these five questions merit serious conversation and consideration both leading up to, and at, our 22nd annual event. For those not able to join us — but interested in following conversations such as these — I invite you to follow me on Twitter via @AlDominick, the host company, @BankDirector, and search & follow #AOBA16 to see what is being shared by (and with) our attendees.
With this morning’s news that Huntington and FirstMerit are set to merge, it is clear that more and more buyers & sellers are getting off the sidelines and into the bank merger and acquisition (M&A) game. So in advance of Bank Director’s 22nd annual Acquire or Be Acquired Conference, seven M&A trends to consider.
By Al Dominick, President & CEO, Bank Director
As I shared in yesterday’s post, we are putting the finishing touches on this year’s Acquire or Be Acquired conference. With nearly 600 bank officers & directors from 300+ banks joining us at the Arizona Biltmore for “AOBA” this Sunday through Tuesday, what follows are seven trends in bank M&A that I expect this hugely influential audience to hear and work to address.
Whether you are coming to the conference or just interested in following the conversations, I invite you to follow me on Twitter via @AlDominick and/or @BankDirector — and search & follow #AOBA16 to see what is being shared with and by our attendees.
Why banks are bought or sold involves much more than just the numbers making sense. Indeed, to successfully negotiate a merger transaction, buyers & sellers must bridge the gap between a number of financial, legal, accounting and social challenges. So in advance of this year’s biggest merger and acquisitions (M&A) conference, a few things I feel attendees of “AOBA” should know.
By Al Dominick, President & CEO, Bank Director
Starting this Sunday at the Arizona Biltmore, Bank Director’s team once again opens the doors to our annual Acquire or Be Acquired Conference — affectionately called “AOBA” (ay-oh-bah). About this time last year, I wrote about a record turnout, one we will exceed in a few days when 925 men and women arrive at this architectural gem.
By design, the numbers I share in the image above only reflect key data from the financial institutions attending. In fact, we are prepared to welcome another 60+ professional services firms and product companies to the Biltmore. While I am particularly impressed by the caliber of support provided to the industry by our sponsoring companies, today’s post focuses on a handful of issues impacting the officers and directors joining us from strong and well performing community banks.
While big banks typically garner mainstream headlines — Wells Fargo, Citi, JPMorganChase and Bank of America account for a whopping $8.1 Trillion of the $17.3 Trillion assets held by banks in the U.S. — the buying and selling of banks takes place outside their domain. The overwhelming majority of deals today involve community banks, many of whom have their CEOs attending AOBA. So for this hugely influential audience, here are my key points to know and consider before the conference kicks off.
Certainly, the buying and selling of banks has been the industry’s “great game” for the last couple of decades. As the conference agenda reflects, we dive deeper into topics like these and look at pre-deal considerations, post-integration challenges and everything in between. So for those not able to join us — but interested in following the conversations — I invite you to follow me on Twitter via @AlDominick, the host company, @BankDirector, and search & follow #AOBA16 to see what is being shared with (and by) our attendees.
Earlier this week, I shared my perspectives on bank M&A with the Wall Street Journal. What follows builds off the piece that ran in Tuesday’s print edition, highlighting key findings from Bank Director’s annual Bank M&A Survey.
By Al Dominick // @aldominick
At a time when J.P. Morgan is getting smaller, the pressure is on for smaller banks to get bigger. As KPMG recently shared with BankDirector.com, there was a 25% increase in bank deals in the U.S. in 2014, compared to 2013, and there is a good possibility that the number of deals in 2015 will exceed that of 2014. One reason for this: a larger institution can spread costs (such as investments and regulatory burdens) across a larger customer and revenue base.
Not surprisingly, 67% of executives and board members responding to Bank Director’s 2016 Bank M&A Survey say they see a need to gain more scale if they are going to be able to survive in a highly competitive industry going forward. As our director of research, Emily McCormick, shared, “many of these respondents (62%) also see a more favorable climate for bank deals, hinting at a more active market for 2016 as banks seek size and scale through strategies that combine organic growth with the acquisitions of smaller banks.”
While the majority of bank executives and boards surveyed feel a need to grow, respondents don’t agree on the size banks need to be in order to compete today. A slim majority, 32%, identified $1 billion in assets as the right size… interesting, but not surprising, when you consider that 89% of commercial banks and savings institutions are under $1 billion in assets, according to the FDIC (*personally, I’m of the opinion that $5Bn is the new $1Bn, but that’s a topic for another day). On to the key findings from this year’s research:
The full survey results are now available online at BankDirector.com, and will be featured in the 1st quarter, 2016 issue of Bank Director magazine. In addition, for those executives interested in connecting with many of the key decision makers driving the deals mentioned above, our annual Acquire or Be Acquired Conference will be held at the Arizona Biltmore from January 31 through February 2.
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Our 2016 Bank M&A Survey, sponsored by Crowe Horwath LLP, examines current attitudes and challenges regarding bank M&A, and what drives banks to buy and sell. The survey was completed in September 2015 by 260 chief executive officers, independent directors and senior executives of U.S. banks, and former executives and directors of banks that have been acquired from 2012-2015.
“The reality is organic growth is tough,’’ said Chris Myers, the president and CEO of the $7.2-billion Citizens Business Bank in Ontario, California, who spoke at our Acquire or Be Acquired conference in January. His bank is one of those in the “sweet spot” for higher valuations and higher profitability, but even he feels the pressure to grow. “A lot of banks are stretching to try to grow [loans] and do things they wouldn’t have done in the past,’’ he said, commenting on the competition for good loans. “ We are going to need to do some acquisitions.”
By Al Dominick // @aldominick
The classic build vs. buy decision confronts executives in every industry. For bank CEOs and board members today, mergers and acquisitions (M&A) remain attractive inasmuch as successful transactions improve operating leverage, earnings, efficiency and scale. While I recently wrote that the best acquisition a bank can make is of a new customer, today’s post looks at what’s happening with bank M&A by sharing a few of my monthly columns that live on BankDirector.com:
In addition to these five columns, I invite you to read this month’s column, “Mind These Gaps,” which posts today on BankDirector.com. It focuses on various pitfalls that have upended deals that, on paper, looked promising (e.g. due diligence and regulatory minefields, the loss of key talent/integration problems and bad timing/market conditions). With perspectives from some of the country’s leading investment bankers and attorneys, it is one I’m pleased to share. Don’t worry, unlike other sites, there is no registration — or payment — required.
Select news and notes from the first day of Bank Director’s annual growth conference at the Ritz-Carlton New Orleans.
By Al Dominick // @aldominick
I mentioned this from the stage earlier today… every January, Bank Director hosts a huge event in Arizona focused on bank mergers and acquisitions. Known as “AOBA,” our Acquire or Be Acquired conference has grown significantly over the years (this year, we welcomed some 800 to the desert). After the banking M&A market tumbled to a 20-year low in 2009 of just 109 transactions, it has gradually recovered from the effects of the crisis. In fact, there were 288 bank and thrift deals last year, which was a considerable improvement on volume of 224 deals in 2013. As our editorial team has noted, the buying and selling of banks has been the industry’s great game for the last couple of decades, but it’s a game that not all banks can — or want to — play. Indeed, many bank CEOs have a preference to grow organically, and its to these growth efforts that we base today and tomorrow’s program.
To kick things off, we invited Fred Cannon, Executive Vice President & Director of Research at KBW, to share his thoughts on what constitutes franchise value. While he opened with a straight-forward equation to quantify franchise value over time — (ROE – Cost of Equity) × Market Premium — what really stuck with me during his presentation is the fact that a logo does not create franchise value, a brand does. As he made clear, it is contextual (e.g. by industry’s served, technologies leveraged and clients maintained) and requires focus (e.g. you can’t be all things to all people). Most notably, small and focused institutions trump small and complex ones.
Anecdotally, the issues I took note of where, in no particular order:
A really full day here in New Orleans, LA — with quite a few spirited discussions/debates. Here are some of the more salient points I made note of throughout the day:
To see what’s being written and said here in New Orleans, I invite you to follow @bankdirector, @aldominick + #BDGrow15.
About That Ratio 