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.