Y’all just halfway thoughts…Not worth the back of my mind…But to understand the future we have to go back in time.

Ok, ok… I have to give credit to Pitbull for his annoyingly catchy “Back in Time” lyrics for Men in Black.  Driving home from the office yesterday, I thought about how the banking space continues to change while his song played on two different radio stations.  Inspired to get out of the car, I re-read various posts on this site — and our company’s — to see how things were twelve months ago.  A few pieces caught my eye; one in particular from “just” six months ago.  In December, I checked in from the NASDAQ MarketSite on the heels of Bank Director’s first Boardroom Forum on Lending.  As you can see in this :36 clip, I reported a note of optimism blanketed the event — a welcome change from previous events marked by pessimism and a sense of fatigue.

While I’d be hard-pressed to describe today’s financial environment as robust, certainly many banks enjoy brighter prospects than at this time last year.  And to go back three years?  Fuhgeddaboudit.

Looking back is really helping me gear up for next week’s big Bank Audit Committee conference at the J.W. Marriott in Chicago.  At this time last year, our good friend John Duffy (the Vice-Chairman of investment bank Keefe, Bruyette & Woods) gave his update on the state of the banking industry.  It wasn’t a pretty picture.  I was reminded that credit quality had improved — but non-performing assets remained high. Deposit growth had slowed dramatically and even the biggest banks, which were more aggressive than the regional banks in terms of provisioning for bad loans, didn’t have much room for growth.

So what to expect next week?  A very good question.  While we will be focusing on important accounting, risk, and regulatory issues facing bank boards of public and private financial institutions, I’m intereted to guage the general mood of attendees.  As they are exclusively officers and directors, I put real stock in their outlook on opportunities — and concerns.

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If you’re interested, I’ll be blogging and tweeting from Chicago (#bacc12) and will share what I hear — Pitbull lyrics TBD.

Y’all just halfway thoughts…Not worth the back of my mind…But to understand the future we have to go back in time.

Ok, ok… I have to give credit to Pitbull for his annoyingly catchy “Back in Time” lyrics for Men in Black.  Driving home from the office yesterday, I thought about how the banking space continues to change while his song played on two different radio stations.  Inspired to get out of the car, I re-read various posts on this site — and our company’s — to see how things were twelve months ago.  A few pieces caught my eye; one in particular from “just” six months ago.  In December, I checked in from the NASDAQ MarketSite on the heels of Bank Director’s first Boardroom Forum on Lending.  As you can see in this :36 clip, I reported a note of optimism blanketed the event — a welcome change from previous events marked by pessimism and a sense of fatigue.

<iframe width=”560” height=”315” src=”http://www.youtube.com/embed/GmtsdRcjB9U” frameborder=”0” allowfullscreen></iframe>

While I’d be hard-pressed to describe today’s financial environment as robust, certainly many banks enjoy brighter prospects than at this time last year.  And to go back three years?  Fuhgeddaboudit.

Looking back is really helping me gear up for next week’s big Bank Audit Committee conference at the J.W. Marriott in Chicago.  At this time last year, our good friend John Duffy (the Vice-Chairman of investment bank Keefe, Bruyette & Woods) gave his update on the state of the banking industry.  It wasn’t a pretty picture.  I was reminded that credit quality had improved — but non-performing assets remained high. Deposit growth had slowed dramatically and even the biggest banks, which were more aggressive than the regional banks in terms of provisioning for bad loans, didn’t have much room for growth.

So what to expect next week?  A very good question.  While we will be focusing on important accounting, risk, and regulatory issues facing bank boards of public and private financial institutions, I’m intereted to guage the general mood of attendees.  As they are exclusively officers and directors, I put real stock in their outlook on opportunities — and concerns.

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If you’re interested, I’ll be blogging and tweeting from Chicago (#bacc12) and will share what I hear — Pitbull lyrics TBD.

We have a burgeoning tradition in our D.C. office that involves frosting, cake and sometimes sprinkles.  When one of our business development team brings in a new client, IMs start to fly about that person “earning” his/her cupcake.  Yes, growing a business sometimes requires sugar and high fives.

While easy to give out to our team, a more challenging task would be sharing such desserts with numerous bankers working hard to grow “wallet share,” generate new fees and adding profitable deposits.  To be sure, a number of banks are extending their footprint and their franchise value through acquisition.  I’m also finding that many others are successfully building their bank internally.

I’m spending more and more of my time exploring the strategies and tactics successful bank CEOs and their boards use to fuel profitable growth.  Let me share a top ten list(?), in no particular order, of the things I’m finding quite a few banks are using to expand their businesses & strengthen their relationships:

1. Growing through product expansion;
2. Building a brand;
3. Focusing on private banking/high net worth individuals;
4. Cross selling / up-selling their customer base for profitability;
5. Using social media to better engage with customers and potential clients;
6. Offering more sophisticated mobile banking apps;
7. Moving customers online;
8. Making branches productive and profitable;
9. Building non-interest income; and/or
10. Growing the small business market.

I know there are a lot more things I could add to this — and these are by no means independent initiatives.  But it does give you a sense of how I’m seeing banks continue to evolve and position themselves now that the “worst of times” appears behind the industry.

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As I mentioned, this list can go on and on… and is just one man’s opinion.  So I’m curious: what do you want from your bank that they are not giving you today?  What would you add to this list?

Yesterday, I shared some thoughts on where and how banks are positioning themselves to compete against the “mega” banks.  While a bank’s CEO and Chairman must work even more closely to drive bottom line performance while enhancing shareholder value, the team must also begin to identify —and groom — the next generation of bank leadership.  Today’s post looks at how this might be done.

When I was toiling away at the Smith school in ‘06 and ‘07, many a professor shared his or her thoughts on how companies attract, develop and retain talented individuals.  Now, the context may have been in terms of data analytics, managerial economics, marketing strategy or operations management.  Regardless, attention was paid to the many issues related to managing “human capital” in organizations public and private, big and small.

So it was with a somewhat academic degree of skepticism that I approached Mark Nadler’s presentation on management succession at today’s Bank Chairman/CEO Peer Exchange (fyi - Mark is a partner at Heidrick & Struggles).  Why this approach?  Simple.  Since returning to Bank Director in September of 2010, I’ve been fortunate to meet a number of very talented, friendly and successful men and women in key leadership positions.  While many acknowledge the importance of grooming a successor, I hear far more stories about a CEO staying on “too long” than those about a clear transition plan.

This is backed up by research done by the executive search firm and Stanford University’s Rock Center for Corporate Governance in 2010.  While I don’t have the methodology or data in-hand, I did make note of a few very interesting results:

• While 69% of respondents thought that the successor needs to be “ready now” to step into the shoes of the departing CEO… only 54% were grooming an executive for this position.
• More than 50% would not be able to name a successor if the incumbent CEO was incapacitated.
• 39% had “zero” viable internal candidates.

Most disconcerting?  On average, boards spent only 2 hours a year on CEO succession planning.  Kudos to Mark for poking the audience with their hesitance to make this more of a priority.  He noted that as much as this is procedural (e.g. a defined succession process, selection criteria, assessment methodology & transition planning), you also have to account for the personal (which includes a CEO’s attitude toward retirement, the CEO’s relationships and senior team relationships) and yes, political (it can become a “candidate horse race,” expose board factions and call into question stakeholder interests).

So what are some of the “keys” to effective succession planning?  The ones that stood out for me are those:

• Linked to your unique strategic and cultural context
• Future-focused (that is, not simply a ‘replacement’ exercise)
• Celebrating that ingredients for success in the future may be different from those in the past.
• Allowed everyone involved to feel it was a process being done with & for them, not “to” them

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Full disclosure: prior to today’s sessions, I went onto the Heidrick site.  While my UX friends would shutter at the aesthetics, credit is due their corporate blog.  While not recently posted, one did catch my eye: The Universal Truth of Change.  In it, there is a call out: Change rules. And rules change.  Worth reading if only to see where that falls in the piece.

As promised on Friday, an end-of-day story from Chicago and Bank Director’s annual Bank Chairman/CEO Peer Exchange (#bccpe12).  Today’s take?  A tale about a Florida community bank coming back from the brink to compete with the big boys.

Few believe you can save your way to profitability.  But if you’re were a Florida banker a few years ago, the million dollar question was where would revenue come from.  If you’re not at a bank, its dangerously simple to suggest revenue-replacement opportunities abound for institutions to consider.  But for those in the hot seat, what can you really do?  Thanks to Jean Strickland, President & COO, Seacoast National Bank and Jim McCormick, President & Founder, First Manhattan Consulting Group, I have a real-world example to share.

Let me tell you a little about Jean and her bank, Seacoast National.  Founded in 1926, this $2+ billion community bank serves Florida’s “Treasure Coast” with 39 offices along the mid-eastern coast to central FL.  The bank is gaining market share when compared with its mega bank competitors thanks to an intense focus on growing its customer base and revenues in a manner consistent with the characteristics of a “back to basics” bank profile.  According to Jean, this means low risk & strong organic growth that translates into attractive shareholder returns over the long term.

Jim complemented Jean’s comments with a look at “Achieving Attractive Revenue Growth and ROE while Avoiding Death by Strategy.”  One of the major points made to the audience of CEOs and Chairmen concerns the “punishing forces” battering banks today.  These include regulations that impact revenue, capital and liquidity, regulations that add to compliance costs, higher FDIC insurance cost, low loan growth and the one investment bankers have been telling me about, a low-to-flat yield curve.

He did note that greater branch coverage (which favors the mega banks) does not lead to greater deposit share.  Smaller banks can win, as customers statistically prefer to work with community banks (this according to a BAI research report).  As part of the deck Jim shared with attendees, he made note of various opportunities banks have to improve their retail business.  For instance:

• Using elasticity-based pricing
• Redesigning fees on checking/plastic/channels
• Evolving branches, call center, and self-serve channels
• Streamline regulatory compliance
• Replacing/cutting non-productive marketing
• Realign key performance indicators (KPIs) and incentives

In addition, he shared strategies at top performing banks like Seacoast.  In his view, they:

• Did not sacrifice profitability for EPS growth
• Emphasized low-cost funding and lower percentage wholesale
• Focused on profitable, organic growth
• Had an answer to “Why should I bank with you?”
• Defined and enforced “What we don’t do”

So while banks continue to search for non-M&A growth opportunities, some real food for thought served up at today’s in Chicago.

When I was in NYC last week, I had the chance to talk with someone from Protiviti about the various ways social technologies are creating opportunities for financial institutions to engage and serve more customers.  Now, our team spends a lot of time with bank CEOs, Chairmen and outside directorsg; based on the various strategic initiatives underway at some pretty healthy-sized banks, I found her views — and a recent two-pager from the consultancy — of interest.  Their premise:

Social media is a compendium of many things – corporate blogs, video-sharing sites such as YouTube, social networks like Facebook, microblogging tools such as Twitter, among others – that leverage the power of Internet, Web 2.0 and mobile technologies to connect people. The convergence of these technologies is forever altering the dynamics of customer relationship management, marketing and corporate communications for many businesses.

Thanks to the explosion of mobile and tablet devices, we see the use of social media technologies — and online videos in particular — quickly becoming an essential component of a successful content marketing strategy.  According to our VP of Strategy, Mika Moser, it’s not too hard to find an article these days touting the benefits of creatively telling a brand’s story through the use of video.  Yesterday, she share a few articles that focus on why today’s marketers should consider adding video to their content marketing efforts. Let me share three worth a look:

• Video Content at ‘the Beginning of the Future’ from the New York Times

• Exclusive: Marketers to Add More Video, Mobile to Content Marketing Campaigns, Altimeter Study Finds

• Got Video? Well, Your Content Marketing Program Probably Should

Need more evidence that this is a valuable marketing tool?  Here are some fun facts:

• 75% of all executives said they watched work-related videos on business websites at least once a week, and more than 50% use YouTube to watch those videos. 

• A survey by eMarketer indicated that virtually 60% of respondents said they would watch video previous to reading text on the same webpage.

At Bank Director, we are investing heavily in developing engaging and informative video content to further educate our niche audience of CEOs, CFOs, presidents, general counsels and directors of financial institutions. Take a look at Bank Director’s YouTube channel if you’d like some recent examples & let me know what you think.  In fact, if you’re in a position to lead or inspire a marketing campaign, I’d be interested to hear how you’re leveraging this medium.  Please feel free to comment below or connect with me directly via LinkedIn.

Today’s been one of good news… the Dow breaks 13,000 for the first time since May of ‘08 and the WSJ runs a positive story about the banking space (At Last! Banks Are Making New Loans).  Yup, U.S. banks increased lending by $130 billion in the last three months of 2011, posting the largest quarterly pickup in four years and “marking a possible upswing in the economic rebound.”

Finally, a cause for optimism?  I wonder, as I’ve had a chance to meet with a number of leading sell-side banking analysts from top research and brokerage firms as we develop Bank Director’s “Analyst Forum.”  It will come as no surprise that banks’ performances have lagged the stock market as a whole, so I’ve asked many what they think is in store for publicly traded banks.  In the following video, we ask Jefferies’ Ken Usdin what he looks for when investing in a bank and his thoughts on the future of the financial industry.  Interesting stuff… drop me a line below and let me know what you think.

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A request to my friends & family in the financial services space… Bloomberg launched a new version of its “flagship financial service:” Bloomberg NEXT.  I’m wondering if we might subscribe, so any feedback on this new product would be appreciated!

…Stand up and be counted for what you are about to receive… We are the dealers… We’ll give you everything you need… Hail hail to the good times… Cos rock has got the right of way… We ain’t no legends ain’t no cause… We’re just livin’ for today… 

For those about to rock, we salute you.

A few years ago, when I was still toiling away at the Smith school, I found myself in an “Executive Mastery Session” class focused on “Communication & Presentation.”  I’ve pulled my notes from that session quite a few times over the past eighteen months.  Why?  In part because the visiting professor shared her tips for opening techniques when speaking publicly:

• Relate the topic to the audience;
• State the importance of the topic;
• Startle the audience;
• Arouse the curiosity of the audience;
• Use rhetorical questions;
• Begin with a quotation; and/or
• Tell a story

Way back when (March 11 of 2008 to be exact), I wrote my first entry for DCSpring21.  From the start, I aspired to write with a clarity, economy and humor in each of my posts.  Four years in and I think I’ve succeeded at times — and fallen far short in others.  But the fun part of this writing remains the same: learning and formulating my own perspectives that build on — and not simply parrot — opinions and ideas of my peers, colleagues and/or elders.  So I take great delight in endorsing two recent additions to the blogoshphere that are banking-relevant but definitely not boring: 

• Banknotes By Kelsey — authored by Kelsey Weaver, Bank Director’s Associate Publisher and the inspiration for today’s Mutt & Jeff comic.

• The Beat on the Banks by Patrick McCarthy, recently a member of the asset management team of the $200 billion Capital Purchase Program within the Office of Financial Stability in the U.S. Treasury (I think he needed 2 business cards to get that title spelled out).  Patrick joined us last month as our Director of Client Relations.

Both are up & comers in the banking community, and while age isn’t always relevant, I did want to point out both are <30.  For an industry most deem the provence of stuffy old men, pretty cool to read their take on what’s timely and relevant in the community today.

If you’re interested in more than just their weekly thoughts, follow Kelsey & Patrick on twitter — and find out more about their backgrounds with LinkedIn.  Kelsey is en route from sunny San Diego to live and work in D.C. (why anyone would want to leave southern Cal is beyond me)… and Patrick has to be stoked to be working a mere two blocks from his high school (Gonzaga).  I think you’ll enjoy their wit and style.

In my next few posts, I’ll share some of the key takeaways from various presentations made at last week’s Acquire or Be Acquired (AOBA) conference.  As you may have read, I had the pleasure of introducing a number of our speakers over the three day event — a culmination of a year’s worth of effort for the Bank Director team.  Leading up to the conference, I spoke with many of the participants as they framed their information and insight for an audience of 550+ bank CEOs, CFOs, Chairmen and board members from banks that ranged from a few hundred million in assets to nearly $17Bn in size.  Up first: a workshop presented by our friends at Griffin Financial entitled “How Do You Make Your Bank Relevant in Today’s Consolidating Industry?”

The first time I met Mark McCollom, I had just downed three cups of coffee & was trying to shake a long night of travel from my eyes.  It was Jan. 30th 2011 — an early Sunday morning to be exact — and I’d just entered a conference room in Hyatt’s Gainey Ranch in Arizona chocked full of talkative bankers eager to hear from the former CFO at Sovereign Bank and his colleagues at Griffin Financial.  Mark, now the Senior Managing Director at the investment bank, was speaking on the first time spot at last year’s AOBA — and I’d been back with Bank Director for only a few months so we hadn’t met.  

While I’d prepared to welcome everyone to our conference, I quickly realized the time for small talk between the two of us would have to wait until after his two hour presentation… a real problem, as I couldn’t find his bio.  Thank goodness their Chairman (who was leading the presentation) bailed me out by introducing Mark to the crowd!

Fortunately, this year’s intro went far smoother than last — much needed, in fact, as it was Mark leading this year’s workshop. So “taking a bailout” was not an option as we opened AOBA with his presentation on staying relevant to potential merger partners and/or investors who provide growth capital.  With a 80+ page deck, let me share some of the more salient points of Mark’s presentation (IMHO):

• Over the past 10 Years, large banks have typically out-earned smaller banks due to both size & scale + an ability to leverage operating expenses.
• Returns for community banks will continue to suffer, with margin compression due to increased competition and flatter yield curves, higher capital requirements under Dodd-Frank and Basel III and more severe risk weighting.
• As recently as 5 years ago, a moderately performing community bank could gain access to public capital sources. This has largely dried up in recent quarters.

To the merger-side of his talk, many are on record that banks < $1 Billion in assets should seriously consider selling their bank (or tying up with a similar sized institution).  While I know quite a few CEOs under this threshold who have absolutely no interest in selling, Mark did share stats like these:

• About 2% of small banks (<$250 million) have sold each year since 2008, and represent about 67-81% of total M&A volume each year, despite being only 66% of the total number of financial institutions
• The median relative size of seller assets has shifted upward from 13% in 2005 to 18.5% in 2011 – according to Mark, this implies lower premiums are allowing banks the opportunity to grow more quickly when they do transact a deal and a greater willingness to pursue a merger of equals

While many factors ultimately impact “relevance” for banks today, Mark ultimately believes it comes down to generating the best returns for shareholders when taken in light of attracting investor or acquirer interest.  Agree or disagree?  Feel free to weigh in below.

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*If you attended the conference, you can access all of Mark’s slides using the “on demand” feature on BankDirector.com (under the past conference tab on the site).