Having just finished our Bank Management Conference at Amelia Island, yesterday we ran Part I of what we learned about becoming a remarkable bank. At the conference, we had bestselling author of Remarkable! and head of marketing for Chick-fil-A, David Salyers; ex-NFL Hall of Fame quarterback, Jim Kelly; and, bankers discuss their experiences in putting some of these ideas into practice.
Tag: Bank Performance
In case you missed our Bank Management Conference this weekend, we thought we would bring you our favorite idea from the gathering of almost 500 bankers and their families – what it takes to be a remarkable bank. Unfortunately, when you consider the one word that describes the average customer experience at a bank, that word is “unremarkable.” If we are honest with ourselves, most banks are as forgettable and as interchangeable as a convenience store or school – we go there because it happens to be the closest to us or we have little choice.
Yesterday we had a chance to interview Joe Garrett, a former successful community bank CEO, active bank investor, current bank director and partner in Garrett, McAuley & Co., a firm specializing in advising banks on how to improve their mortgage business. Joe is not only an expert in bank mortgage operations but one of the sharpest wits around with a near-photographic memory when it comes to politics and baseball. We sat down with Joe and asked him the top three questions that have been on our mind.
In the course of our work with community bankers, we deal with hundreds of banks across the country and talk to thousands of lenders. Competition is intense and every lender is looking for an advantage against the national or regional bank. A better product, faster service, or insightful advice can translate into additional loans, better spreads or additional fee income.
As of December 2014, there were 6,518 FDIC insured financial institutions. Of the total number of insured financial institutions, 1,872 were less than $100mm in total assets while 3,477 were less than $200mm in total assets. At the top of the asset range, there were only 36 institutions with assets greater than $50B, and those 36 institutions account for 71% of all assets ($11.06B), 63% of all loans ($5.23B), and 69% of all deposits ($8.2B). The above data speaks to the concentration in the banking industry with all of its attendant problems for consumers, regulators an
In game theory, there is what is called the “dominant strategy.” A dominant strategy for a bank is a position that no matter what other competitors do, that bank will earn a larger return. Now, few strategic decisions facing a bank have a dominant position, so when a bank finds a choice that results in a dominant decision it is imperative that they take it. Thus, when we get asked “What is the one thing that a bank must do to ensure its future,” this one strategy is on the top of our list.
JD Power’s 2015 US Retail Banking Satisfaction Study that was released in part several weeks ago had some interesting information that might impact the strategy and tactics for community banks. While the full report will not be out until the end of this month, we were highlighting some points for our management so we wanted to share. The overarching good news is that, in general, satisfaction with banking continues to increase and once again community banks led the way with a score of 802 compared to large banks at 786.
We have written a number of blogs on the relationship between commercial loan pricing, loan-to-value (“LTV”), amortization terms and riskiness of leverage. Our major theme is that the common secondary source of repayment (liquidation of collateral) is much less consequential than the common first source of repayment (cash flow). There are a few reasons why this is the case. The primary three reasons are as follows: 1) cash flow, not collateral, is a causal relationship to payment defaults, 2) variability around loss-given-default as measured by LTV is very large, and 3) credit loss is ma
One problem with training bank staff is the proverbial “Man with a hammer syndrome.” If you only have a hammer, then every problem appears to be a nail. In other words, if your bank has only solved problems one way, then it is a fair bet to say that they will keep on solving problems the same way. The problem is that bank staff needs to be trained with new mental (or physical) models so that they have more tools than just a hammer.