The Intersection of Ideas and Opportunities

Quickly:

  • In a few days, the lights come up on the annual FinXTech Summit, a program that explores ways for banks to delight customers, generate top-line growth and enhance bottom-line profits through partnerships and investments in technology companies.

PHOENIX — When I last stepped foot in Arizona, it was to host Bank Director’s annual Acquire or Be Acquired Conference.  The January event attracts a hugely influential audience focused on mergers, acquisitions and growth strategies & tactics.  While there, we noticed quite a few presentations explored how and where financial institutions might invest in, or better integrate, digital opportunities.  So, as a complement to Acquire or Be Acquired, I’m back in the desert to dive deeper into myriad ideas for banks to improve profitability and efficiency with the help of technology firms.

As we prepare to host our FinXTech Annual Summit at the Phoenician, take note: smart banks are investing and/or partnering with technology companies because they realize it’s cheaper and faster than building something themselves.  Further, the largest banks in the U.S. are rapidly evolving with advances in artificial intelligence across chatbots, robo-advisors, claims, underwriting, IoT and soon blockchain — all of which add another layer of potential to further shake-up traditional business models.  In fact, there was a palatable sense among bankers at AOBA about the evolution in financial technology.

Nonetheless, many banks, especially those between $500M and $30Bn in assets, are on the outside looking in — and this is where FinXTech’s Summit story begins.

From exploring data to leveraging cognitive computing to gaining efficiencies in backroom processes, this year’s event surfaces a number of potent ideas.  For instance, we shine a light on how bank leadership can truly unleash the potential of a technology partner.  Further, we pull current quotes and issues like these to discuss and debate:

One thing I love about customers is that they are divinely discontent. Their expectations are never static — they go up. It’s human nature. We didn’t ascend from our hunter-gatherer days by being satisfied. People have a voracious appetite for a better way, and yesterday’s ‘wow’ quickly becomes today’s ‘ordinary’
Jeff Bezos, Founder and Chief Executive Officer

Likewise, we share our takes on key acquisitions — like JP Morgan’s acquisition of WePay — while identifying how institutions leverage newer technologies to improve efficiency ratios and in some cases, boost franchise valuations.

In a sense, FinXTech’s Summit serves as our “in-person” bridge between banks and qualified technology companies.  For those joining us, we’ll touch on various products and services for security, data & analytics, infrastructure, lending, mobile banking, payments and regtech while convening an exceptionally senior audience of 200+.  Throughout the event, I’ll share my thoughts via Twitter, where I’m @AlDominick and using #FinXTech18.  Finally, I’ll author a daily update on this site with my observations from the conference.

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.

AOBA15-demographics-2

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.

Bank Director’s 2015 Acquire or Be Acquired Conference Primer

On Sunday, January 25, we kick off Bank Director’s 21st annual “Acquire or Be Acquired” Conference (@bankdirector and #AOBA15) at the luxurious Phoenician resort in Scottsdale, Arizona.  I am so very excited to be a part of this three day event — and am supremely proud of our team that is gearing up to host more than 800 men and women.  With so many smart, talented and experienced speakers on the agenda, let me share a primer on a few terms and topics that will come up.  In addition, you will find several links to recent research studies that will be cited before I share one example of the type of issues being both presented and addressed at “AOBA.”

Colorful Language

Just as M&A is a colorful — and complex — issue, so too are the words, terms and considerations used by attorneys, investment bankers and consultants in management meetings, in the boardroom or at the negotiating table.  Here are three terms I thought to both share and define in advance of AOBA (ay-o-bah):

  • Triangular merger: This happens when the acquirer creates a holding company to acquire the target and both the acquirer and the target become subsidiaries of the holding company.
  • Cost of capital: You could say this is the cost to a company of its capital, but another way to look at it simply is this: the minimum return you need to generate for your investors, both shareholders and debt holders. This is what it costs you to operate and pay them back for their investment.
  • Fixed exchange ratio: This is the fixed amount for which the seller exchanges its shares for the acquirer’s shares. If the buyer’s stock price falls significantly post-announcement, that could mean the seller is getting significantly less value.

Again, these are but three of the many terms one can expect to hear when it comes to structuring, pricing and negotiating a bank merger or acquisition.

Research Reports

Throughout the year, our team asks officers and directors of financial institutions to share their thoughts on board-specific issues — like growth and more specifically, mergers & acquisitions.  Allow me to share an overview on these two research reports along with links to the full results:

Of note: 84% of the officers and board members who responded to this Growth Strategy Survey, sponsored by the technology firm CDW, say that today’s highly competitive environment is their institutions’ greatest challenge when it comes to organic growth — a challenge further exacerbated by the increasing number of challengers from outside the industry primed to steal business from traditional banks.

Of note: There’s no shortage of financial institutions seeking an acquisition in 2015, but fewer banks plan to sell than last year, according to the bank CEOs, senior officers and board members who completed Bank Director’s 2015 Bank M&A Survey, sponsored by Crowe Horwath LLP.

Valuing a Bank

Understanding what one’s bank is really worth today is hugely important.  Whether buying, selling or simply growing organically, a bank needs metrics in place to know and grow its valuation.  On BankDirector.com this past October, I shared why earnings are becoming more important than tangible book value (Why Book Value Isn’t the Only Way to Measure a Bank). Clearly, a bank that generates greater returns to shareholders is more valuable; thus, the emphasis on earnings and returns rather than book value.  Yes, investors and buyers will always use book value as a way to measure the worth of banks. Still, I anticipate conversations at the conference that builds on the idea that as the market improves and more acquisitions are announced, we should expect to see more attention to earnings and price-to-earnings as a way to value banks.

##

Please feel free to comment on today’s piece below or share a thought via Twitter (I’m @aldominick).  More to come from the “much-warmer-than-Washingon DC” Arizona desert and Acquire or Be Acquired in the days to come.

Community banks, meet social media?

I posted these thoughts on January 30 to my DCSpring21 blog… as I move away from sharing bank-specific thoughts on that site (in favor of this one), I thought to re-post in advance of a few pieces I’m working on.

no-one-said-this-would-be-easy

55%

… or, the final percentage that correlates to the results shared from a Q&A with bankers earlier this week. Sorry, it is not the percentage of turtle tiles found at the Phoenician’s pool. That would be too easy; although, the image does fit when you consider the number of banks using social media vs. those that are not.

No, this is a post about building a brand — and with it, customer loyalty and engagement. For those of us that have been in a business development position, it is oh-so-true that its not easy to build a brand. But make no mistake, the rewards can be immense should you succeed. And yes, the 55% foreshadows the end to this piece.

Admittedly, I thought about taking this post towards my last few company’s efforts to employ various social media tools. However, the importance of building a recognizable, memorable and relevant brand came up with numerous bank CEOs and Chairmen at our recently-concluded Acquire or Be Acquired conference. To a man, they acknowledged the stakes to successfully position a bank are higher than ever, what with the growing popularity of credit unions, new technology and ever-emerging social media platforms. Even more so when a bank customer’s product adoption and brand loyalty is measured at the speed of a tweet or a post. Clearly, the integrity of a brand becomes critical.

So I was/am SHOCKED that more community banks haven’t hitched their wagons to the social media wagon. This is not speculation or wild assumption. Its based on hard fact.

Let me take a step back and explain. We welcomed 275 banks to the Phoenician for our 19th Acquire or Be Acquired this past Sunday, Monday and Tuesday — with a CEO, Chairman, CFO or director attending. I believe (but don’t have the final numbers in hand) that of the 720+ attendees, 575 worked for a bank. I share these numbers as a lead into this question I raised:

Question: How many of you are successfully using these on a daily basis to engage with your customers and potential customers. I’m going to ask ONLY the bankers in attendance to answer this one — and answer on behalf of your bank, not yourself. So you might be a proficient twitter’r, have more than 500 connections on your personal LinkedIn account and have been sharing pictures of this conference on FaceBook with your friends and family. But we’re curious how the banks here are making social media work for them.

The results pulled via an audience response system are startling — and suggest that those in the social media business have ample opportunity at community banks if they can show a bank’s directors and officers how the following ties into their business. The raw results:

  • Facebook = 33%
  • LinkedIn = 11%
  • Twitter = 4%
  • Pinterest = 0%
  • We do not use social media = 55%.

Wow.

%d bloggers like this: