Banking

Despite (or perhaps because of) a turbulent political, economic, and regulatory climate, analyst predictions continue to point to 2017 as an active year for bank M&A transactions. On one side of the coin, it’s because large banks are striving to ‘bulk up’ in the face of regulations. On the other, it’s because small community banks are buckling to shareholder pressures and seeking to exit.

By nature, business owners are goal setters and innovators. They embrace the challenge to turn vision into reality. As your business grows locally, you might begin to think about expanding to another state as the next step. Whether that move is imminent or is part of a long-term goal, preparing for it requires that you think back and reassess the steps you took when you first started your business.

In 1965, Gordon E. Moore, co-founder of Intel and Fairchild Semiconductor, predicted the amount of transistors in a dense integrated circuit would double every two years. He theorized that processing technology power, bandwidth and storage capacity would progress at the same rate. By 2015, that pace of advancement had slowed only slightly to closer about two and a half years, but his predictions largely have held true.  We are in an age where technology is increasing so rapidly, it is no longer just changing. It is transforming.

If you’re planning to expand your financial institution into another city or state, whether through location based expansion or an M&A approach, proper planning is important. Building a plan before you embark on expansion can help to ensure the success of your growth, secure your compliance, and keep you from costly penalties. 

Changes in technology, demographics, globalization, regulations, and interest rates have altered the business of banking dramatically. In the past few weeks, the Wall Street Journal reported that for the first time ever, more people are using mobile banking apps than going into bank branches on a weekly basis (39% versus 24%). The stat is not all that surprising. What is telling is how quickly we reached that pivot point.

Community banks have many strong assets that offer every reason for optimism. Even in the face of technology change, new demographics and increasing globalization of services, these smaller, local institutions have a host of leverageable assets.[1]

Employees need to feel inspired by the company mission and values, because raw talent is meaningless without the will to create results. - KISSMetrics

“In a time of drastic change it is the learners who inherit the future. The learned usually find themselves equipped to live in a world that no longer exists.”

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Eric Hoffer, Philosopher

As discussed in our previous blog, Strategy Unlocks the Window of Opportunity, failing to recognize and plan for opportunities often leads to missed successes and the dreaded what if. As Hoffer eloquently observes, it is those who stay focused on learning and developing a strategy to capitalize on change that are best equipped to secure growth and prosperity long into the future.

Over the last three months, the HORNE Banking team has hosted a series of webinars focused on various growth strategies within the banking industry. We started by exploring the uptick in mergers and acquisitions activity with Christopher Olsen at Olsen/Palmer and moved into a discussion with John Mabry of Keefe, Bruyette & Woods about opportunities available for banks looking to go public.  

The common theme across these discussions is the increased growth potential for banks that have a vision of who and where they want to be in the future. The institutions most likely to succeed are working toward clearly set goals with flexibility, discipline and focus. 

For about nine years, analysts have predicted two game changers for the banking industry – an M&A boom and an interest rate hike. The M&A prophecy came true in 2014, with the highest transaction volume since 2006. Based on year-to-date transaction activity, this trend will continue through 2015.

Recently, I had the privilege of discussing The Big Deal About Big Data at the 2014 Louisiana Bankers Association Technology Conference. While the topic of Big Data historically has been discussed primarily in the halls of the marketing department, more and more, it is becoming a strategic focus across the organization. The reasons for that are many, but as always, the numbers tell the most convincing story.

Once considered a service exclusive to large banks, wealth management has become a growing source of non-interest income for community banks.

Last weekend, my wife, teenage daughters, and I took part in Toyota TeenDrive 365. Toyota offers this interactive defensive driving education program with a stated goal of creating the next generation of safe drivers.