Happy July 5th!

Union Station in D.C.
Union Station in D.C.

As we wrap up this short week, here are three “stories” that caught my eye. As I pack my family up for a few week’s vacation in New England, please enjoy. Happy 5th of July!

1. On Monday, Curtis Carpenter shared with me the news that Prosperity Bank in Texas acquired First Victoria — a deal struck for approximately 2.3x tangible book and 18x earnings. As Houston’s Business Journal details, Prosperity has been on an acquisition streak for some time. The bank has completed six merger or acquisition agreements in the past 18 months. Maybe this deal portends a busier 2nd half of the year, deal-wise, than the first? Certainly something Curtis and his team at Sheshunoff & Co. stand ready to support.

2. On Tuesday, the Fed held an open meeting to finalize “highly-anticipated rules” needed to implement Basel III’s capital requirements in the United States. Since its proposal last year, many executives from banks under $10Bn in asset size have expressed strong concerns with several aspects of the proposed rule. Now, the plan adopted on Tuesday will force all banks to hold more and higher quality capital. However, smaller banks will have a bit more leeway with their capital — which should allow them to take more risks than their larger competitors. While the Fed’s plan requires the nation’s largest banks to abide by stricter capital requirements than had been originally planned, mid-size and community banks appear to have received several breaks. Fed governors, according to the American Banker, said the final package offered an “appropriate sensitivity” in its treatment of smaller-sized financial institutions, “forgoing placing too much burden on firms while still strengthening overall capital standards.” If you want to dig deeper, this table from the Fed highlights those provisions most relevant to smaller, non-complex banking organizations and compares the new capital requirements to the current standards.

3. A lot of digital ink was spilled on Basel III this week; in my opinion, I think the ABA wrote it best: “the real test for Basel III is whether the rule makes it easier or more difficult for banks to serve their customers. If it makes it harder, that’s not what our still-recovering economy needs.” So on a much lighter note, the ICBA shared a top 50 “Community Bank Leaders in Social Media.” Based on fans/followers, engagement, content and frequency of posts, the small bank advocate lists the social media channels being put to use. All have a Facebook page; interestingly, not all have a Twitter account, few utilize YouTube and shockingly few employ LinkedIn (shh… don’t ask about Pintrest, Instagram or other social sites frequented by their young customers). Taking it a step further, they shared a top 20 “Community Banker Influencers on Twitter.” While I’m not sure how some qualified based on the number of followers and/or tweets, it is a good list of bankers if you’re looking to start or expand your twitter-verse.

Aloha Friday!

Financially Focused Friday Fun

1st stop at the Ferry Building in SF
Always my 1st stop at the Ferry Building in SF

What does my favorite, favorite, favorite purveyor of coffee have to do with banking (and payments)? I’ll do my best to connect the dots in this week’s financially focused Friday post. If you missed the last few week’s, take a spin on our way back machine, aka the search button on left.

As I do every Friday, what follows are three stories that I read/watched/heard this week. While tempted to open with a longer mention of seagulls, social media and white smoke, let me see if a picture really is worth a thousand words. This one succinctly captures the feelings that many community bankers have shared with regards to the last few year’s worth of new government regulation and scrutiny. It also sets up the first of this week’s three points:


  • The WSJ ran an interesting piece entitled Small Banks in U.S. Hit by Rising Insurance Costs earlier this week. The premise: thousands of small U.S. banks “are feeling a financial pinch from the government’s efforts to punish executives and directors of banks that collapsed during the height of the financial crisis.” While I promise not to dwell on insurance costs or D+O liability issues today, Robin Sidel’s coverage (which I think originated at our M&A conference in January?) echoes what I’ve heard from bank executives. Namely, “the insurance squeeze is the latest headache for community banks that are still grappling with fallout from the financial crisis. Low interest rates, new regulations and tepid loan demand are pressuring profit. Many small banks would like to get out of the jam by selling themselves but can’t find buyers.”

Truth be told, I’m a bit talked out about bank M&A this week, so I won’t go down that path for point number two. Organic growth proves far more interesting — as its currently far more elusive:

  • On the same day I sat down with the founder and CEO of the Bank of Georgetown (who I think is doing a heckuva job building his bank), I had the chance to catch up with John Cantarella, President, Digital, News & Sports Group at Time Inc. Both talked about how banks are growing/changing; albeit, in much different terms. While Bank of Georgetown continues to build through commercial lending, let me share some thoughts inspired by John. In full disclosure, he recently sat down with our Chairman and agreed to speak to bank CEOs, board members and C-level execs our Growth conference in New Orleans. Subsequently, John and I talked about the focus of his presentation, “Standing Out in a Digital World,” and how he might introduce disruptive technologies and the companies bringing them to market (e.g. Simple and Square). If you’re not familiar with Square, its considered one of the hottest companies in the mobile payments space. When I hopped on their site to dig deeper, I saw that Blue Bottle Coffee Co. recently adopted Square for its point-of-sale. You should DM our Associate Publisher to find out how long she thinks it took for me to add this to today’s piece. So consider this my nod to both companies, our conference and this DC community bank. All interesting stories that really should have their own posts. Hmmm…. next week?

Finally, I do take comfort knowing a pendulum can swing only so far. While strictly my opinion, I believe too many folks within the various regulatory bodies focused on financial institutions (not hedge funds, not multi-national financial services organizations) are missing huge opportunities to contribute to — and communicate with — the banks they oversee. While I get off my soapbox, let me conclude with my third and final point from this week:

  • I saw the Comptroller of the Currency discussed community bank supervision at the Independent Community Bankers of America Annual Convention yesterday. I’m not in Las Vegas nor attending their event, so I simply hope the OCC’s lawyers didn’t totally overhaul his remarks. There are a lot of very real questions/concerns I know bankers would like addressed (e.g. Basel III, the tax benefits credit unions enjoy compared to community banks, etc.). If you were there and care to share, I’d be interested in any feedback/insight…

Aloha Friday to all!

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