We All Have Standards, Right?
Posted June 28, 2017 by Stephen D. Heckard in From the Experts.
Each one of us has our own set of standards, what we understand to be acceptable and what is not acceptable. Standards define a minimum of acceptable behavior and how we live our lives. In today’s Trends in Technology blog, “We All Have Standards, Right?” Steve Heckard asks, “is your bank protected by contractually-defined standards for technology services?” For every contracted technology service, there should be well- defined standards of minimally acceptable performance.
The Board’s Vital Role in Lending
Posted June 27, 2017 by Vincent Van Nevel.
We have all heard this mantra time and again. “The board is responsible for safely directing the business and affairs of the institution in the best interest of shareholders, customers, the community, and in accord with the law.”
Morris to Host Western Independent Bankers’ WIBinar on June 27
Posted June 26, 2017 by Jeffrey L. Morris.
On Tuesday, June 27 at 10 a.m. (PST), Jeff Morris, Managing Director of ProBank Austin, will present a WIBinar on “The Seven Secrets of Consistently High Performing Community Banks” to members of the Western Independent Bankers Association. WIB serves members in 13 states including Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington and Wyoming.
Jeff Morris Addresses Virginia Bankers Association Annual Convention
Posted June 16, 2017 by Jeffrey L. Morris.
Jeff Morris, Managing Director of Financial Management at ProBank Austin, addressed the Virginia Bankers Association at its 124th annual convention held at The Homestead in Hot Springs, Virginia, June 18-24. Jeff’s breakout presentation was on “The Seven Secrets of Consistently High Performing Community Banks.” Jeff discussed how several key features are consistent among high performing community banks – one being the critical role of operating efficiency, other traits coincide with and solidify a bank’s long-term ability to provide consistent high value to shareholders, directors, consumers and employees. A copy of his presentation is linked below.
CECL: ONE YEAR LATER
Submitted by Adam Davis, June 13, 2017.
One year ago, on June 16, 2016, the Financial Accounting Standards Board issued ASU No. 2016-13 “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments”, which introduced the current expected credit loss methodology for establishing allowances for credit losses. In the banking industry we have come to know this now by “CECL”. As a banker, you may be on your way to developing a plan or you may be like many and wondering when and how you should start.
There has to be a Better Way
Posted May 24, 2017 by Michael M. Moran in From the Experts.
The Dodd-Frank Act became public law in the 111th Congress nearly seven years ago. Its objective, as the country moved through the Financial Crisis and the devastating effects of the Great Recession, was primarily four-fold:
-Promote the financial stability of the United States by improving accountability and transparency in the financial system
-End “Too Big to Fail”
-Protect the American taxpayer by ending bailouts
-Protect consumers from abusive financial services practices
PROBANK AUSTIN TRANSACTION ANNOUNCEMENT: Doolin Security Savings Bank to Affiliate with First Mutual Holding Company
ProBank Austin Provided Advisory Assistance to First Mutual Holding Company
Lakewood, Ohio-based First Mutual Holding Company (“FMHC”), the largest member-owned mutual holding company of its kind in the Midwest ($1.7 billion) announced that New Martinsville, West Virginia-based Doolin Security Savings Bank, FSB (“Doolin”) ($48 million) has agreed to affiliate with FMHC, pending approval of regulatory agencies and of voting members of Doolin.
The Cost of Saying Goodbye!
Submitted by Stephen D. Heckard, May 16, 2017
Two years ago, I was asked to review data processing contracts for a small bank to determine departure costs as part of a potential acquisition. We have a very active Investment Banking Division that provides assistance to banks looking to acquire and banks looking to be acquired. In either case from time-to-time, I am asked to provide estimates for terminating processing contracts and deconversion charges. I would like to share with you two recent examples regarding terminating processing contracts.
Contracts – It’s All About the Fine Print!
Submitted by Stephen D. Heckard, April 26, 2017
I have a recurring nightmare that I will come back in my next life to practice contract law. I do not have a law degree, so hopefully that will minimize the chances. However, reviewing contracts is a significant part of my everyday duties, whether managing a core vendor evaluation or renewing a contract with an existing vendor. Since ProBank Austin has a very active Investment Banking Division, from time-to-time, I review client contracts or a target institution’s contracts to determine departure costs if acquired. My assignment is to specifically review a departure from existing processing agreements.
Has March Madness Led to April Anxiety?
Submitted by Michael M. Moran, April, 2017
A few months back, coming off the results of the Presidential election, we opined on the seemingly rocket-fueled rally in bank stocks. At the time, we posited the following as probable/potential catalysts underpinning the significant positive move in the sector:
Meaningful tax reform – might rates drop from approximately 35% to 25% or lower?
Fintech – Be Current and Cognizant!
Submitted by Stephen D. Heckard, April 5, 2017
This blog concludes the Trends in Technology series on fintech, although I do plan on returning to the subject whenever I encounter a fintech subject that I think should be expanded upon. Each day, I invest approximately one hour reviewing email and other resources on fintech. It is possible that in the coming weeks something on fintech will catch my eye and become the subject of a future blog. We will see.
And the Winner is…?
Submitted by Michael M. Moran, March 5, 2017
And no, I have not been handed the wrong envelope. Nor is this the analogous case of an unheralded #16 Seed knocking off a dominant #1 blue-blood in the NCAA basketball tournament that has become “March Madness” – shocking, but likely short-lived. As the chart below reflects, bank stock prices literally came to life after the events of November 8, fueled by expectations of tax cuts, regulatory relief, pro-growth sentiment in D.C., and a favorable interest rate environment. And while the run since the Election has been nothing shy of staggering, seemingly prevailing potential headwinds and countervailing prospective tailwinds make for an interesting environment as we sit here today.
PROBANK AUSTIN TRANSACTION ANNOUNCEMENT: Central Bancompany Completes Acquisition of Bank Star One
ProBank Austin Served as Financial Advisor to Bank Star One
Central Bancompany, Inc., Jefferson City, Missouri, announced that it has completed the acquisition of Bank Star One, Fulton, Missouri. The acquisition was announced on August 19, 2016 and closed on February 23, 2017.
Fintech – A Few Additional Steps to Prepare for Fintech Disruption
Submitted by Stephen D. Heckard, March 6, 2017
Card fraud has been a vexing problem for all institutions. Recent fintech developments may begin to reduce that by increasing the authentication of the payee. One very intriguing method of authentication for card purchases is “selfie pay.” It is exactly as it sounds. A picture of the payee’s face is taken at time of purchase and is compared to a stored picture for verification. Presumably bad hair days won’t create a problem. MasterCard successfully tested this with First Tech Federal Credit Union last year and now is rolling it out in Europe.
PROBANK AUSTIN TRANSACTION ANNOUNCEMENT: First Commonwealth Bank and First Guaranty Bank Agree to Merge
Submitted on February 28, 2017 – ProBank Austin Announces Second M&A Deal of 2017
February 23, 2017 – First Commonwealth Bank, Prestonsburg, Kentucky, announced its agreement to merge with First Guaranty Bank, Martin, Kentucky (press release). The definitive agreement, which is subject to customary regulatory approval, has been approved by the Boards of both banks. Financial terms of the transaction were not disclosed. It is anticipated that the merger of the banks could occur during the second quarter of this year.
Fintech – A Few Additional Steps to Prepare for Fintech Disruption
Submitted by Stephen D. Heckard, February 21, 2017
In my blog, “Preparing for Fintech Distruption” I suggested two steps in preparing for the potential impact of fintech on community banks. These are two significant steps, ensuring that your Board is aware of this potential and discussing what alternative your core vendor can provide. However, there is much more that you can and should do to embrace fintech. Waiting until your bank feels the effects of disruption may be too late to effectively react.
First Merchants Corporation (Muncie, IN) to Acquire Independent Alliance Banks (Fort Wayne, IN)
Submitted on February 17, 2017 – ProBank Austin Served as Exclusive Financial Advisor to Independent Alliance Banks, Inc.
(Muncie, In. and Fort Wayne, In., February 17, 2017) First Merchants Corporation (NASDAQ: FRME) and Independent Alliance Banks, Inc. (OTCQX: IALB)(IAB) today announced they have executed a definitive agreement whereby IAB will merge with and into First Merchants, and its wholly owned bank subsidiary, iAB Financial Bank (iAB), will merge with and into First Merchants Bank.
Do the CCAR Scenarios Signal Regulatory Focus?
Submitted by Michael M. Moran, February 16, 2017
Do the CCAR (Comprehensive Capital Analysis and Review) scenarios signal regulatory focus? Put another way have preliminary indications about regulatory concern over developing CRE concentrations been subtly reinforced in this year’s stress scenarios? Some folks, particularly my family, might accuse me of probably diving a little too deep into numbers at times.
2017 Community Bank Budget Review
Submitted by Jeffrey L. Morris, February 9, 2017
At ProBank Austin, we are always curious at this time of year to find out what’s on the minds of our community bank clients, and in particular, to better understand their plans and goals for the coming year.
Fintech – Are APIs in Your Future
Submitted by Steve Heckard, February 8, 2017
Application Program Interface (API) technology is a hot topic when discussing fintech. Today’s Trends in Technology blog, Fintech – Are APIs in Your Future?, defines API technology and explores the positive and negative applications that affect the banking industry.
The Changing Role of the Compensation Committee of the Board of Directors in Community Banks
Submitted by Jon Doukas, April 12, 2016
Introduction. Traditionally, most executive compensation decisions have been handled at the December meeting of the board of directors, and these decisions were based on limited information and the board’s subjective judgment. However, executive compensation has become more complex. The passage of the FDIC Improvement Act of 1991 (FDICIA), Dodd-Frank Wall Street Reform Consumer Protection Act, and Securities and Exchange Commission Regulations, regarding executive pay communications to stockholders, have made compensation procedures and decisions more challenging. Media coverage and stockholder interest have also increased in recent years. The result has been the need to develop a more formalized approach to the institution’ total compensation programs.
Working the Appraisal
– and Playing the Numbers
Submitted by Ann Scott, April 4, 2016
If loan underwriting and cash flow analysis are the main course of a loan, appraisals are typically considered a part of the appetizer. Actually, they’re the burgundy to the beef, the Alfredo to the fettuccine, the mint to the julep. It’s up to the appraisal reviewer to take a close look at the numbers. Do the rents used by the appraiser match the most recent Tax Return or FYE numbers? What about the expenses? Did the appraiser use a “market percentage” or the actual expenses indicated by the financial information?
– Not Just Minutiae
Submitted by Ann Scott, March 14, 2016
Appraisals contain a lot of data. The information can be ignored or it can be viewed with an eye towards usefulness. Sometimes the untrained eye will gloss over details that are critical to a loan structure. Following are just a few items that can be critical to a lending decision.
Risk Management and Strategic Planning
– A Long Courtship
Submitted by Vince Van Nevel on March 10, 2016
Talk about risk management! Our neighborhood men’s group half-jokingly volunteered a friend, recently retired from the Air Force with combat “tours” in the Middle East, for a project some thought was a bit risky, declaring he was a risk taker. He quickly corrected us stating, in the military the whole idea is to identify risks in your mission and then make plans to minimize them while still accomplishing your goal with a highly trained and disciplined team. If the risk assessment presented too much risk they may scrap the mission and/or find alternative strategies to achieve their objective.
C&I Lending Trends 2015
Submitted by Vince Van Nevel on February 23, 2016
Red Sky at Morning, Sailors Take Warning
For the first time ever, total outstanding commercial & industrial loans exceed total 1-4 family first lien loans, and stand at a record $1.842 trillion as of December 31, 2015. Total 1-4 family first lien loans stood at $1.836 trillion. If this was a horse race, C&I loans won by a nose! However, there may be a storm just over the horizon.
Many years ago when I lived in Chicago working for the OCC, I was certified to sail 30 foot sailboats on Lake Michigan. That is when I first heard of the rhyming weather rules of thumb, the other being “red sky at night, sailors delight.” The “on the water” portion of the certification was primarily spent learning how to depart from and return to the dock without destroying the boat. They wanted to know we could captain the ship safely and that we knew what we were doing; their version of risk management.