Look At Who Is Attending Acquire or Be Acquired

In just 20 days, we raise the lights on our 23rd annual Acquire or Be Acquired Conference.  This is Bank Director’s biggest event of the year, one primarily focused on banking’s “great game” — mergers and acquisitions.  My team has spent considerable time and energy developing a spectacular event focused on growth-related topics that range from exploring a merger to preparing for an acquisition; growing loans to capturing efficiencies; managing capital to partnering with fintech companies.  To see the full agenda, click here.

Widely regarded as one of the banking industry’s premier events, we have more than 1,000 people registered to attend AOBA later this month — an all-time high.  We couldn’t do this alone, and over the course of these 2 ½ days, executives from many of our industry’s leading professional services firms and product companies share their perspectives on “what’s now” and “what’s next.”  I invite you to take a look at all of the corporate sponsors joining us:

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As I shared in a recent post, bank executives and their boards face some major issues without clear answers.  Before heading out west, I’ll share more about the banks (and 660+ bankers) joining us at the JW Marriott Phoenix Desert Ridge Resort & Spa.  Until then, I invite you to learn more about the companies supporting this conference by hopping over to bankdirector.com. To follow the conversations happening around this conference on Twitter, I’m @aldominick and we are using #AOBA17.

FI Tip Sheet: Great Bank CEOs (part 2)

“You know who’s good” might be one of my favorite conversation starters… be it talking football or baseball, banking or business, it always interests me to hear who others consider leaders in a particular field or discipline.  As the country’s economic recession gives way to recovery and many more banks return to profitability, quite a few executives have success stories to share.  This week’s tip sheet builds on last week’s post by highlighting three exceptional CEOs that lead publicly traded banks before shifting to the thoughts and opinions of two very talented colleagues.

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(1) In case you missed it, last week’s tip sheet looked at some of the best CEOs in the business today — broken down into three categories: the “biggest banks” with $50Bn+ in assets, those with more than $5Bn but less than $50Bn and finally, those in the $1Bn to $5Bn size range.  After I posted the piece, I thought about a number of bankers that could have been included in the $5 to $50Bn summary.  For example, Joe DePaolo, the president & CEO of Manhattan-based Signature Bank, a $19.7-billion asset, NASDAQ-listed financial institution.  He’s led the bank’s growth, from a mere $50 million in assets at its founding in 2001 to close to $20 billion today.

Likewise, Jim Herbert’s work to build First Republic Bank (the bank he founded in 1985 and is listed on the NYSE) deserves praise and recognition.  I shared my thoughts on Jim’s bank after meeting him last year.  For those in the know, First Republic is one of this country’s great banks. Not only is it solely focused on organic growth, it’s also focused solely on private banking. While my conversation with Jim was off-the-record, I left his office convinced its the smarts within, not the size of, a bank that will separate the have’s from the have-nots in the years ahead. Clearly, as new regulations and slim profit margins challenge the banking industry, the skills and backgrounds of the employees who work in banking must change too.

Finally, the co-head of Sandler O’Neill’s Investment Banking group, Bill Hickey, praised Vince Delie – the President & Chief Executive Officer of the 11.7Bn, NYSE-listed FNB Corproration.  According to Bill, Vince “has led FNB through four acquisitions in the last three years and three capital raise transactions… FNB continues to deliver above market returns and has been rewarded with a currency that trades at 245% of Tangible Book Value.”

(2) Before joining out team a few years ago, Bank Director Magazine’s Managing Editor, Naomi Snyder, spent 13 years as a business reporter for newspapers in South Carolina, Texas and Tennessee.  Based on this background, and her current responsibilities, I asked for her thoughts on the qualities and characteristics of a successful bank CEO.  In her words, “some of the CEOs of great banks seem to have leadership qualities without being bullies. I don’t think they hire a bunch of “yes” people who will agree with them as the ship is sinking. They don’t have charismatic personalities at the expense of honesty and ethics.”  She noted that in multiple performance rankings in Bank Director magazine, these banks show some consistent themes. “Great banks differentiate themselves from the competition. They often don’t compete on price but on quality of service, and there is no way to do that without hiring a superior staff and motivating employees to do their best.”

(3) To put some color and context to Naomi’s thoughts, I asked Jack Milligan, the Editor of Bank Director magazine, to share his thoughts on three community bank CEOs that are doing some impressive things.  The qualifier?  Keep ’em “local” — he is in Charlottesville, I’m in D.C. — and close to $1Bn size.  Fortunately for me, Jack accepted my challenge and suggested I take a look at Fairfax, VA-based First Virginia Community Bank (FVC).  Led by Chairman & CEO David Pijor, FVC was “a November 2007 de novo that has grown to $422 million in assets as of December 2013.  Pijor, a veteran of the NOVA banking market, raised $23 million in a little over eight weeks and had the bank up and running in just 11 months.  Granted, this was prior to the subprime mortgage crisis and “Great Depression,” and Pijor has had the advantage of being in one of the strongest banking markets in the country, but the bank’s loans, deposits and capital over the past 7+ years have been impressive all the same. Pijor also did a small acquisition in late 2012 that enabled FVC to expand into neighboring Arlington County. I would expect to see big things out of this little bank.”

Next, he pointed me towards Citizens & Northern Corp., a financial institution based in Wellsboro, PA and led by their Chairman & CEO, Chuck Updegraff.  As Jack shared, “C&N is situated in North Central Pennsylvania, not exactly a banking growth market although the local economy has received a bit of a lift from natural gas exploration in the Marcellus Shale Region. This is just a very well-run bank that makes the most of what its market has to offer, and Updegraff deserves credit for running a very tight ship.  C&N has a little over $1.3 billion in assets and was the top ranked $1-$5 billion bank on Bank Director’s 2012 Bank Performance Scorecard and the 2nd ranked bank in 2013.”

Finally, Jack lauded National Bankshares Inc., an organization that counts James Rakes as its Chairman & CEO.  Per Jack: “if you’ve ever been to Blacksburg, VA – the home of Virginia Tech University and a neighbor of nearby Radford University in Christiansburg – you know that it’s a beehive of activity nestled in the mountains and forests of Southwestern Virginia. At just slightly over $1 billion in assets,National Bankshares is another well-managed bank that takes full advantage of everything its market has to offer – in its case a relatively strong local economy that benefits from having two vibrant universities. Virginia Tech is the 2nd largest public college in the state and is a major research institution. National was the 3rd ranked bank in the $1-$5 billion category in the 2012 Bank Performance Scorecard, and placed 6th in 2013.”

Now, I will tease Jack that he could have talked about a number of fine community banks in the Washington, D.C. area (for example, the Bank of Georgetown, which has grown considerably under the leadership of Mike Fitzgerald, their Chairman, President & CEO).  Nonetheless, his is a good look at those institutions that may not have national brand recognition, but are strong and stable pieces of their local communities.

Aloha Friday!

FI Tip Sheet: Some of Banking’s Best CEOs

Last month on Yahoo Finance, Sydney Finkelstein, professor of management and an associate dean at Dartmouth’s Tuck School of Business, produced a list of the Best CEOs of 2013, one that includes Jeff Bezos of Amazon, Pony Ma of Tencent,  John Idol of Michael Kors, Reed Hastings of Netflix and Akio Toyoda of Toyota.  Inspired by his picks, I reached out to a number of colleagues that work for professional services firms to ask their thoughts on the top CEOs at financial institutions — along with why they hold them in such regard.  What follows in this morning’s tip sheet are myriad thoughts on some of the best CEOs in the business today — broken down into three categories: the “biggest banks” with $50Bn+ in assets, those with more than $5Bn but less than $50Bn and finally, those in the $1Bn to $5Bn size range.

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(1) Top CEOs at financial institutions over $50Bn

The names and logos of institutions over $50Bn — think M&T with some $83Bn in assets, KeyCorps with $90Bn, PNC with $305Bn and US Bancorp with $353Bn — are familiar to most.  Leading these massive organizations are some tremendously talented individuals; for example, John Stumpf, the CEO at Wells Fargo.  Multiple people shared their respect for his leadership of the fourth largest bank in the U.S. (by assets) and the largest bank by market capitalization.  According to Fred Cannon, the Director of Research at Keefe, Bruyette & Woods, John “has created and maintains a unified culture around one brand, (one) that demonstrates strength and stability.  Wells is exhibit #1 in the case for large banks not being bad.”

Similarly, U.S. Bancorp’s Richard Davis garnered near universal respect, with PwC’s Josh Carter remarking “Richard has continued to steer US bank through stormy seas, continuing to stay the course running into the downturn, taking advantage of their position of relative strength, weathering the National Foreclosure issues and managing to avoid being considered part of ‘Wall Street’ even though US Bank is one of the 6 largest banks in the U.S.”

Finally, Steve Steinour, the CEO at Huntington Bancshares, inspired several people to comment on his work at the $56Bn institution.  Case-in-point, Bill Hickey, the co-Head of the Investment Banking Group at Sandler O’Neill, pointed out that since taking the helm in 2009, Steve has led a “remarkable turnaround… Huntington is now a top performer and is positioned to be the dominant regional bank in the Midwest.”

(2) Top CEOs at financial institutions between $5Bn and $50Bn

For banks between $5Bn and $50Bn, Greg Becker at Silicon Valley Bank garnered quite a few votes.  Headquartered in Santa Clara, California, I think they are one of the most innovative banks out there — and several people marveled that it has only grown and diversified under Greg’s leadership.  According to Josh Carter, “what they’re doing is a good example of how a bank can diversify their lending approach while maintaining a prudent credit culture.”  This echoes what Fred Cannon shared with me; specifically, that the $23Bn NASDAQ-listed institution is “the premier growth bank with a differentiated product.”  

Fred also cited the leadership of David Zalman, the Chairman & Chief Executive Officer at Prosperity Bancshares Inc., a $16 billion Houston, Texas-based regional financial holding company listed on the NYSE.  According to Fred, David demonstrates how to grow and integrate through acquisitions that is a model for other bank acquirors.  C.K. Lee, Managing Director for Investment Banking at Commerce Street Capital, elaborated on David’s successes, noting their development “from a small bank outside Houston to one of the most disciplined and practiced acquirers in the country and more than $20 billion in assets. The stock has performed consistently well for investors and the acquired bank shareholders – and now they are looking for additional growth outside Texas.”

Keeping things in the Lone Star state, C.K. also mentioned Dick Evans at Frost Bank.  In C.K.’s words, “this is a bank that stayed true to its Texas roots, maintained a conservative lending philosophy, executed well on targeted acquisitions and a created distinctive brand and culture. As Texas grew into an economic powerhouse, Frost grew with it and Mr. Evans was integral to that success.”

Finally, Nashville’s Terry Turner, the CEO of Pinnacle Financial Partners, drew Bill Hickey’s praise, as he “continues to successfully take market share from the larger regional competitors in Nashville and Knoxville primarily as the result of attracting and retaining high quality bankers. Financial performance has been impressive and as a result, continues to trade at 18x forward earnings and 2.4x tangible book value.”

(3) Top CEOs at financial institutions from $1Bn to $5Bn

For CEOs at banks from $1Bn to $5Bn, men like Rusty Cloutier of MidSouth Bank (“a banker’s banker”), David Brooks of Independent Bank Group (“had a breakout year in 2013”) and Leon Holschbach from Midland States Bancorp (“they’ve not only grown the bank but added significant presence in fee-income businesses like trust/wealth management and merchant processing”) drew praise.  So too did Jorge Gonzalez at City National Bank of Florida.  According to PwC’s Josh Carter, Jorge took over a smaller bank in 2007 “with significant deposit concentrations, large exposures to South Florida Real Estate, weathered a pretty nasty turn in the economy and portfolio value and emerged with a much stronger bank, diversified loan portfolio and retained key relationships.  Jorge has also managed to maintained an exceptional service culture, with a significant efficiency level and has combined relationship driven sales to grow the bank.  Jorge has also diversified the product mix and is one of the few smaller banks that can really deliver on the small bank feel with big bank capabilities.”

In addition, Banner Bank’s CEO, Mark Grescovich, won points for his work at the commercial bank headquartered in Walla Walla, Washington.  Mark became CEO in August 2010 (prior to joining the bank, Mark was the EVP and Chief Corporate Banking Officer for the $24Bn, Ohio-based standout FirstMerit). In Fred Cannon’s words, the transformation “is truly exceptional and Mark accomplished this by encouraging and utilizing a talented team of bankers from legacy Banner.”

Finally, Ashton Ryan at First NBC in New Orleans is one I’ve been told to watch.  Indeed, C.K. Lee shared how “Ryan capitalized on the turmoil in New Orleans banking to turn in strong organic growth, with targeted acquisitions along the way. The bank is recently public and has been rewarded by the market with a strong currency to go with its strong balance sheet and earnings.”

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In addition to the list above, I have been very impressed by Peter Benoist at Enterprise Bank in St. Louis, look up to Michael Shepherd, the Chairman and Chief Executive Officer for Bank of the West and BancWest Corporation and respect the vision of Frank Sorrentino at ConnectOne.  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.

Aloha Friday!

Giving Thanks

Winston Churchill once said, “a pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty.”  I believe we all aspire to see the proverbial glass as half full — so this quote is one I thought to share as we wrap up this Thanksgiving week.  As I do each Friday, what follows are three things I’m thinking about; in this case, what I’m grateful for — in a professional sense — that reflects Churchill’s sentiment.

(1) The Harvard Business Review ran a piece this April entitled Three Rules for Making a Company Truly Great.  It began “much of the strategy and management advice that business leaders turn to is unreliable or impractical. That’s because those who would guide us underestimate the power of chance.”  Here, I want to pause and give thanks to my tremendous colleagues at Bank Director — dreamers and implementors alike — who prove that fortune really does favor the prepared mind (and team).

(2) I believe that leadership is a choice and not a position.  As a small company with big ambitions, I find that setting specific directions — but not methods — motivates our team to perform at a high level and provide outstanding support and service to our clients.  This parallels the principle value of McKinsey & Co., one eloquent in its simplicity: “we believe we will be successful if our clients are successful.”  I read this statement a number of years ago, and its stuck with me ever since.  As proud as I am for our company’s growth, we owe so much to the trust placed in us by nearly 100 companies and countless banks.  Personally, I am in debt to many executives for accelerating my understanding of issues and ideas that would take years to accumulate in isolation.  Since returning to Bank Director three years ago, I have been privileged to share time with executives from standout professional services firms like KBW, Sandler O’Neill, Raymond James, PwC, KPMG, Crowe, Grant Thornton, Davis Polk, Covington, Fiserv… and the list goes on and on.  These are all great companies that support financial institutions in significant ways.  Spending time with executives within these firms affords me a great chance to hear what’s trending, where challenges may arise and opportunities they anticipate for their clients.  As such, I am thankful to be in a position where no two days are the same — and my chance to learn never expires.

(3) Finally, I so appreciate the support that I receive from my constituents throughout our industry.  It might be an unexpected compliment from a conference attendee, a handwritten thank you note from a speaker or the invitation to share my perspectives with another media outlet.  Regardless of how it takes shape, let me pay forward this feeling by thanking our newest hires, Emily Korab, Taylor Spruell and Dawn Walker, for expressing an interest in the team we’ve assembled and goals we’ve set.  Taking the leap to join a company of 17 strong might scare some towards larger organizations, but I’m really excited to work with all three and expect great things from each.

A late Happy Thanksgiving and of course, Aloha Friday!

On Fee Income + Staying Relevant

Cloud Gate in Millennium Park
Cloud Gate in Millennium Park

So I shared my excitement for the RedSox World Series victory earlier today… Before I pack my things for a trip to the JW Marriott in Chicago, let me share three things I learned this week that relate to bank CEOs and their boards, not baseball and beards.

(1) As our very talented editor, Jack Milligan, wrote in the current issue of Bank Director, when it comes to fee income, “drivers tend to fall into three general categories, beginning with a variety of consumer-based fees from such things as foreign ATM withdrawals, overdraft protection plans, debit card transactions and some checking accounts.”  I bring this up as Jack and the team at Bank Director magazine ranked the top 50 publicly traded banks based on their ratio of non-interest income to total operating revenue for 2011 and 2012. The totals for both years were then averaged, which determined the order of finish. All banks listed on the New York Stock Exchange and NASDAQ Stock Exchange were included in the analysis (which was performed by the investment banking firm Sandler O’Neill + Partners in New York). At the top of the ranking are New York-based Bank of New York Mellon Corp., State Street Corp. in Boston and Chicago-based Northern Trust Corp.  For a full look at the results, click here.  For the story itself, register for free on BankDirector.com to access the digital issue of the magazine.

(2) Clearly, banking’s profit model is going through a period of transition.  Here, companies like StrategyCorps play an interesting role in helping financial institution meet their needs for more fee income without upsetting its customers.  No one — at least, that I know — wants to  pay for basic, traditional retail banking services.  They resent when a new fee is added on to an existing free service or product with no additional value (case-in-point, Bank of America’s $5 debit card fee debacle).  So as Mike Branton wrote in the Financial Brand, “financial institutions must seek new ways to incorporate non-traditional services that connect with consumers’ lifestyles.”  StrategyCorps took to Finovate’s Fall stage in NYC in September to demo, in less than 7 minutes, how financial institutions can use an enhanced mobile experience to successfully bring in fee income.  Take a look.

(3) Finally, I will be tweeting throughout our annual Bank Executive & Board Compensation conference next week (using hashtag #BEBC13).  This year’s 9th annual event focuses on compensation trends, talent acquisition/attraction and retention strategies. In addition, it looks at how the next few years’ merger activity might influence incentive compensation plans and performance-based pay structures.  I intend to post a few “postcards” from Chicago throughout the week — the first (tentatively set for Tuesday) on how companies develop executives, attract leadership and approach compensation in today’s highly competitive and economically challenging world.

Aloha Friday!