|March 7, 2014|
Community Bankers: Acquire or be Acquired
to the Federal Deposit Insurance Corporation (FDIC), the number of
federally insured financial institutions nationwide shrank to 6,891 in
2013 - falling below 7,000 for the first time since federal regulators
began keeping track in 1934. Those numbers are not lost on members of
the Independent Community Bankers of America (ICBA), who recently held
their annual convention in Honolulu, HI. Below are some key points made
by community bankers:
These quotes from ICBA’s conference attendees, reported by American Banker, show just how concerned they are for the future of their segment of the banking industry:
- Banks below the $1 billion-asset mark likely will not survive in the long-term
- Banks should consider increasing deposit fees to maintain and find new income
- Community bankers see big banks, not regulators, as their biggest threat
think local banks need to combine,’ says Robin Cummings, chief
executive at the $559 million-asset Peoples Bank of Alabama in Cullman.
He believes…the oft-mentioned $1 billion-asset mark is the minimum
threshold for survival.”
“"Either we acquire or we get
acquired,’ Alan Thian, the president and chief executive of Royal
Business Bank in Los Angeles says. The $718 million-asset bank has made
three acquisitions since it was formed five years ago. ‘Regardless of
niche, you have to get to a certain size. Eventually, whether on your
own or through merger, you need to get to $700 million to a $1 billion. I
don't see a niche bank surviving if they are smaller than that.’”
FDIC data also shows only 500 financial institutions are above the $1
billion-asset mark. The trend of fewer bank branches and banks will
continue for the foreseeable future and the regulatory uncertainty of
Dodd-Frank has exacerbated the situation. Add in the adoption of new
technology by consumers, and it is easy to see how many banks are not as
well positioned to weather the storm. I remain bullish on CBA’s member
banks who recognized these trends and are quickly moving to keep pace
with the demands of the marketplace.
Small Dollar Credit Still in Demand by Consumers
At the end of 2013, the Center for Financial Services Innovation (CFSI) released its 2012 Financially Underserved Market Size Study.
The study is especially relevant given the virtual elimination of
Deposit Advance Products and increased CFPB scrutiny of payday lenders.
According to the study, subprime consumers spent an estimated $41.2
billion on small-dollar credit in 2012. CFSI estimated 15 million
consumers used at least one of five common products – payday, pawn, auto
title, nonbank installment and deposit advance. Of those consumers,
about one-third regularly spent more than they make.
because a product is eliminated, does not mean demand is eliminated as
well. Consumers still need to find ways to make ends meet, as 70 percent
of all consumers live paycheck-to-paycheck. We believe it should be
done inside the heavily regulated banking industry. There is no telling
how many of these consumers have turned to financial providers outside
those recognized by the study – think the Tony Sopranos of the world.
CBA LIVE Hotel Room Group Rate Expires Today, March 7th – Book Now
We have record banker attendance for CBA LIVE 2014 and the group rate for hotel rooms expires on March 7, 2014. Please make your hotel reservation today online
or by calling the Gaylord directly at (301) 965-4000. Remember to
mention you are attending CBA LIVE so you receive the group rate.
We are glad to welcome eOriginal, Garnet, and CMC as the 25th, 26th and 27th newest associate members for 2014.
News and Notes
UFJ Financial Group, Inc. (MUFG), has announced effective July 1, 2014,
it will integrate The Bank of Tokyo-Mitsubishi UFJ U.S. branch banking
operations with Union Bank, N.A., and operate the combined U.S. banking
operations under the new name MUFG Union Bank, N.A. Tim Wennes, Union
Bank Vice Chairman and Chief Retail Banking Officer and CBA’s
Chairman-Elect, will become West Coast President, effective July 1,