Swimming With Sharks

A resident of the Mandalay Bay in Las Vegas
A resident of the Mandalay Bay in Las Vegas

I’ve been on a lot of planes lately, and while I read a ton, I also listened to several interesting podcasts to pass the time.  One in particular brought statistician Nate Silver and author Malcolm Gladwell together with ESPN’s Bill Simmons to discuss how periodicals are adjusting to the Internet age (ok, some sports came up too). I liked their premise that it doesn’t take much skill to be the first to do something, but the later you are, the smarter you have to be.  Much as the publishing/media industry needs to speed up the creative process, so too do financial institutions of all sizes.  Take a listen to the podcast if you’re interested in their take; for three things I’m thinking about based on the last four days, read on.

(1) Yes, credit unions and banks are both financial institutions; this, however, is where the similarities end in my opinion.  I spend so much of my time with bankers that I decided to flip the script and attend the National Directors’ Convention for credit unions in Las Vegas this week.  As I depart the Mandalay Bay (today’s draft title was “Banking on Sin”), today’s tongue-in-cheek title is a nod to those organizations that compete with banks.  True, I enjoyed the cheerleading aspect of certain sessions; for example, “A Higher Purpose: Why Credit Unions Are Different Than Banks.”  Nonetheless, as session after session juxtaposed a credit union’s marketing, lending and risk & compliance efforts with those of community banks, I’m not sure why credit unions should continue to be exempt from taxes as they are.  Look, my Grandfather helped set up a credit union in Massachusetts, and I appreciate why credit unions were initially granted nonprofit status.  But as they directly compete with banks, the tax question stirs the pot at our conferences… and does have me scratching my head about the fairness of an uneven playing field.

(2) Woody Allen is credited with saying 90% of life is showing up. But John Kanas and his team at Florida-based BankUnited (which has $12.6 billion in assets) are doing a lot more than that.  At least, that’s what I’m thinking after reading “A Steal of a Deal” by our very talented Managing Editor, Naomi Snyder.  While a lot of attention in Bank Director’s current issue goes to “The Top Performing Banks” due to our scorecard that ranks all NYSE and NASDAQ listed banks, Naomi’s piece is a must-read.  As you will see, the best mid-sized bank in the country is headed by an incredible dealmaker with an appetite not just for risk but with an eye for long-term growth.

(3) Thinking about growing a bank puts a board’s role in strategic planning front and center.  So when Promontory’s founder and CEO, Gene Ludwig, writes that “Big Changes Loom for Bank Boards,” I think it’s an appropriate link to share.  In a piece that runs on American Banker, the former head of the OCC writes “the do’s and don’ts of board governance are still emerging, and there is an honest debate over the core topics — how effective new and detailed expectations are at improving safety and soundness, and whether new standards are merging the concepts of governance and management. However, the fact of the matter is that regulators are not going to back away from their enhanced expectations for the board. Board members and managers who do not take heed proceed at their peril.”  Take a read if you’re interested in his nine points a bank and its board might consider in today’s highly charged regulatory environment.

Aloha Friday!

Since the SEC approves…

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Taking a peek at the city…

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.

and on that lovely note, Aloha Friday to all!

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