Kicking off FinXTech’s Summit

Quickly:

  • Technology continues to transform nearly every aspect of the financial services industry — from mobile payments to peer-to-peer lending to financial management.

PHOENIX — Tomorrow morning, we kick off our annual FinXTech Summit.  As I wrote yesterday, this annual event serves as our “in-person” bridge between banks and qualified technology companies.  Personally, I am so impressed to witness numerous financial institutions transforming how they offer banking products and services to businesses and individuals.  As such, I find myself eager to engage in tomorrow’s conversations around:

  • Partnerships, collaboration and enablement;
  • How and where banks can invest in cloud-based software; and
  • The business potential of machine learning, advanced analytics and natural language processors.

Joining us at the Phoenician are senior executives from high-performance banks like Capital One, Customers Bank, Dime Community Bancshares, First Interstate Bank, IBERIABANK, Mechanics Bank, Mutual of Omaha Bank, PacWest, Pinnacle Financial, Seacoast National Bank, Silicon Valley Bank, South State Bank, TCF National Bank, Umpqua, Union Bank & Trust, USAA and US Bancorp.  Long-time tech players like Microsoft share their opinions alongside strong upstarts like AutoBooks during this two-day program.  So before I welcome nearly 200 men and women to this year’s conference, allow me to share a few of my preliminary thoughts going into the event:

For those with us here in Arizona, you’ll find nearly every presentation explores what makes for a strong, digitally-solid bank.  So to see what’s trending, I invite you to follow the conference conversations via our social channels. For instance, I am @AlDominick on Twitter — and our team shares ideas and information through @BankDirector plus our @Fin_X_Tech platform.  Finally, search & follow #FinXTech18 to see what’s being shared with (and by) our attendees.

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

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

Bank Director’s 2015 Acquire or Be Acquired Conference

Banks are increasingly interested in the topic of mergers and acquisitions, which must have something to do with our record attendance at this year’s Acquire or Be Acquired Conference in Scottsdale, Arizona.

The fun begins at The Phoenician (pictured above) this weekend with Bank Director’s 21st annual “AOBA.”  Last year, we welcomed 435 officers & directors from 271 financial institutions to the Arizona Biltmore.  This year, we have 522 bankers and bank board members from more than 300 banks in attendance. Merger activity is clearly gaining steam, and this is bringing more interested parties to the table.

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Three Days in the Desert

Why banks are bought (or sold) involves much more than just the numbers making sense.  Moreover, to successfully negotiate a merger transaction, buyers and sellers must bridge the gap between a number of financial, legal, accounting and social challenges. So allow me to sketch out what’s on tap for this massive three-day event.

On Sunday…

To kick things off, we take a macro-level look at capital markets and operating conditions for banks nationwide. Additionally, we look at how M&A fits within a broad range of strategic options for a bank’s board and how some successful acquirers have aligned transactions to achieve strategic goals.  Of note, we welcome the perspectives of CEOs from high performing banks like Pinnacle National Bank, Banner Corp.First Interstate BancSystem, IBERIABANK and CVB Corp. as part of several presentations. On stage, these men will share their thoughts on what it takes to build and lead successful institutions.

On Monday…

Building on the first day of the conference, we turn our attention to the long-term preparation required by both a buyer and seller.  For instance, regulatory planning remains critical to getting deals done for both sides — especially on compliance issues.  Thematically, Monday builds on Sunday’s presentations, with sessions dedicated to helping a bank’s board make a rational buy, sell or hold decision.

On Tuesday…

To put a bow on this year’s event, we start with a look at what the biggest banks are doing today followed by a series of breakout sessions on more in-depth topics.  To conclude, we welcome the perspectives of our friends from NASDAQ who will look at trends, issues and the “movers and shakers” in the technology world that may impact growth and innovation within the financial community.  As much as AOBA explores one’s financial growth opportunities, this final session examines what’s happening outside of our industry that may precipitate new changes or challenges to a bank’s growth aspirations.  Oh and in the afternoon… we swap suits for cleats, wrapping up AOBA with our annual golf tournament.

Can’t Make it?

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 #AOBA15 to see what is being shared with our attendees.

Giving Thanks for Great Leadership

We are getting close to that time of year when people start writing their top ten lists, providing year-in-review posts and taking out the proverbial crystal ball.  In this spirit, my post-Thanksgiving piece provides a list of bank CEOs I met this year that impressed me with both their bank’s performance & personal leadership styles.  From the outside looking in, I have to assume shareholders and employees alike appreciate what each has done for their organization.

A few days ago, David Reilly authored a piece in the Wall Street Journal entitled “Wanted: Dance Partners for Bank Merger Ball” (sorry, registration required).  Citing Bank Director’s annual M&A research report, he reminded us that it takes two to tango — and “that is still the issue for investors expecting, or hoping for, a significant pickup in bank merger activity in 2015.”  As we showed in our survey of about 200 bank directors and executives, 47% said they planned to purchase a healthy bank in the next 12 months — but 87% also said they had no intention to sell.  So a steady hand to lead an institution strikes me as imperative for those banks seeking growth through traditional, or acquisition-based, means.  This got me thinking…

Over the course of the year, I am lucky to meet Chief Executive Officers from all over the country.  To build on three posts from earlier this year (my “FI Tip Sheet: Some of Banking’s Best CEOs,” “FI Tip Sheet: Great Bank CEOs” and “FI Tip Sheet: The Top Women in Banking“) here, in no particular order, are nine community bank CEOs that made memorable impressions on me in 2014:

  • Jay Sidhu, the Chairman and CEO of Customers Bank, ran Sovereign Bank for nearly 20 years and started Customers Bank from scratch in ’97.  The bank has grown from its original five branches in the suburbs of Philadelphia to 14 offices in three states — Pennsylvania, New York and New Jersey. Thanks to Jay’s disciplined approach to growth, Customers has seen its assets increase to $6.5 billion as of August 25.
  • Down in Texas, Scott Dueser, the Chairman, President & CEO at First Financial, embodies the concept of loyalty — to his employees, his customers and to the First Financial family as a whole (he’s been a part of it for more than 38 years).  Oh, and his bank placed first in the $5 billion to $50 billion asset category in Bank Director’s annual Bank Performance Scorecard — a ranking of the 200 largest publicly traded bank holding companies in the United States based on their 2013 financial data.
  • Up in RedSox country (sorry, CT might be a swing state between Yankees and RedSox fans, but the team from my home town is far superior), Bill Crawford leads United Financial Bancorp, the bank holding company for United Bank and Rockville Bank.  A $5 billion community bank founded in 1858 with 60 branches in New England, Bill’s determination to merge the two proverbial “equals” as seamlessly as possible reflects a real commitment to the combined teams, client bases and cultures.
  • Billed as the “bank for VCs and entrepreneurs,” Doug Bowers, the President & CEO at Square 1 Bank, oversees the NC-based bank with more then $1bn in assets.  As he shared, their focus on banking entrepreneurs and their investors is all that that they do.  Yes, it is 100% of their business.
  • Robin McGraw, embodies “intrapeneurship.”  The Chairman & CEO of Tupelo, MS-based Renasant Corporation, the parent of Renasant Bank, runs the 110-year-old financial services institution.  With approximately $5.8 billion in assets, Renasant operates more than 120 banking, mortgage, financial services and insurance offices in Mississippi, Tennessee, Alabama and Georgia. Under Robin’s watch, the bank made in-sourcing their IT work a priority — which puts them in a favorably competitive position as the world becomes even more digital.
  • I know Daryl Byrd, President & CEO at IBERIABANK Corporation, sees quite a few potential deals cross his desk as he runs the oldest and largest bank headquartered in Louisiana.  The financial holding company operates 280 combined offices and successfully serves a niche commercial and private banking target audience.  Over the past few years, IBERIABANK has been held up as one of the better acquirers in terms of integrating a team/brand into its own — something they will do again with their recently announced acquisition of Old Florida Bancshares.
  • Any time I am able to spend time with Mike Fitzgerald, the Chairman, President & CEO at Bank of Georgetown in Washington, D.C., I come away inspired.  Being a local presence since 2005 — with a great reputation for growing organically — Mike and his team have quickly made this one of the best community banks in the Washington metropolitan area.
  • John Corbett, the President & CEO at CenterState Bank of Florida, runs one of the fastest growing community banks headquartered in the Sunshine State.  Founded in 1999, CenterState Bank has grown to nearly $4 billion in assets.  Just last month, John talked with us about the need to innovate or risk becoming stagnant and losing the ability to compete for exceptional talent.
  • In terms of taking risks, David Brooks, of Independent Bank Group in Texas, can share a story or two.  As I wrote for BankDirector.com in October (Deciding Whether to Sell or Go Public), David was one of the first to take a bank public following the financial crisis, guiding the bank’s 2012 IPO that raised $100 million at 2.2 times tangible book value. The company has announced eight acquisitions since 2010; most notably, with Bank of Houston in a deal that added more than $1 billion in assets to Independent Bank when the deal closed in April.
  • Finally, a tip of my hat to Leon Holschbach, the Vice Chairman, CEO and President of Midland States Bancorp. Leon stands out for his recruitment & retention efforts and has graciously shared how his company develops executives, attracts leadership and approaches compensation in our highly competitive and economically challenging world.

This is by no means a comprehensive list, and I realize there are many, many more leaders who deserve praise and recognition. Click the “+” button on the bottom right of this page to comment on this piece and let me know who else might be recognized for their leadership prowess.

Who Says There Is No Growth In Banking

Two big takeaways from the second day of Bank Director’s 2nd annual Growth conference (#BDGrow14): institutions of all sizes are challenged when it comes to standing out from the crowd & enhancing your mobile banking presence should be a top priority for all boards of directors.

A 2 Minute Recap on the Past 4 Months

 

Take No Risk, Make No Money
While some may not think about enterprise risk management in the context of growing one’s bank, Crowe’s Jennifer Burke made clear that proactively identifying, mitigating, and in some cases, capitalizing on risks provides a distinct advantage to a bank.  Keep in mind that even smaller institutions — with less complex business structures — face myriad risks that might significantly affect their ability to meet their growth plans.  As Jennifer shared, those that proactively identify and respond to risks and opportunities gain a competitive advantage over their peers, especially in responding to our ever-changing business environment.

Millennial and the End of Banking?

The Times-Picayune ran a nice story in today’s edition based on The Growth Conference.  The newspaper noted that “younger generations report more comfort with online and mobile banking tools, posing a hurdle for banks used to ginning up business through face-to-face interactions.”  So it is fair to ask if banks should be scared of the millennial generation.  According to Daryl Byrd, president and CEO of IberiaBank, the answer is no.  As mentioned in this piece (Will Millennials be the end of banking as we know it? Bank execs weigh in at Growth Conference in New Orleans), Byrd was among a panel of industry leaders gathered at the Bank Director Growth Conference to discuss business trends, including the challenges in reaching younger customers.  Byrd, “who noted he is the father of three Millennials, said his children, like many in their generation, aren’t building wealth as much as they are taking on debt. That means their demand for banking services will be limited in the near term,” he said.

Trending Topics

The issues I took note of this morning were, in no particular order:

  • Just like “synergy” became a cliché, so too might “omni” when it comes to delivering a consistent customer experience (e.g. omni-screen, omni-channel, etc);
  • Not all customers are created equally;
  • A bank’s board has the chance to re-set strategies to target, acquire, engage, grow and retain customers… but need to look ahead to what’s possible as opposed to the past to see what has historically delivered results.

To comment on this piece, click on the green circle with the white plus sign on the bottom right. Safe travels home to all who joined us in New Orleans this week (and yes, Aloha Friday!)

The Single Greatest Constraint on Growth

With the revenue pressures facing the banking industry being some of the most intense in decades, banks need to think more constructively about their businesses. At the same time, changing consumer behavior could drive the industry to reallocate its resources to less traditional growth channels in order to stay ahead.  In my view, the words of an English naturalist reflect the single greatest constraint on growth today.

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Powerful Forces

One of our long-term corporate sponsors, PwC, recently shared their thoughts on the future of the retail banking industry.  In their view, “powerful forces are reshaping the banking industry, creating an imperative for change. Banks need to choose what posture they want to adopt – to lead the change, to follow fast, or to manage for the present. Whatever their chosen strategy, leading banks will need to balance execution against… critical priorities and have a clear sense of the posture they wish to adopt.”  If you, like our friends from PwC, are joining us in New Orleans later this week to dive into this very topic, their compelling “Retail Banking 2020” report might make for good airplane company.

Looking Back in Order to Look Ahead

Last year, John Eggemeyer, a Founder and Managing Principal of Castle Creek Capital LLC, helped me to kick off our inaugural Growth Conference.  As a lead investor in the banking industry since 1990, he shared his views on our “mature industry,” That is, banking follows a historic pattern of other mature industries: excess capacity creates fierce competition for business which in turn makes price, not customer service, the key differentiator.  While offering myriad thoughts on what makes for a great bank,  John did share some hard-to-swallow statistics and opinions for a crowd of nearly 200 bankers and industry executives:

  • Publicly traded banks from $1 billion to $5 billion in assets saw their stock values rise at about half the rate of the broader market as a whole since early 2009.
  • Of the 300 or so publicly traded banks in that size range, only about 60 of them traded at their pre-recession price multiples.
  • In the last 40 years, bank stocks always followed the same pattern in a recession: falling in value quicker than the rest of the market and recovering quicker.

I share these three points to provide context for certain presentations later this week.  Some build on his perspectives while others update market trends and behavior.  Still, an interesting reminder of where we were at this time last year.

Getting Social-er

Yesterday, I shared the hashtag for The Growth Conference (#BDGrow14).  Thanks to our Director of Research — @ehmccormick — and Director of Marketing — @Michelle_M_King — I can tell you that nearly 30% of the attending banks have an active twitter account; 78% of sponsors do.  On the banking side, these include the oldest and largest institution headquartered in Louisiana — @IBERIABANK, a Connecticut bank first chartered in 1825 with over $3.5 billion in assets — @LibertyBank_CT and a Durham, NC-based bank that just went public last month — @Square1Bank.  On the corporate side of things, one of the top marketing and communications firms for financial companies —@wmagency, a tech company that shares Bank Director’s love of orange — @Fiserv and a leading provider of personal financial management — @MoneyDesktop join us.  Just six of many institutions and service providers I’m looking forward to saying hello to.

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More to come — from New Orleans, not D.C. — tomorrow afternoon.