Community Banks lag Mega-Banks in profitability and efficiency metrics. ROA and ROE measures are at least 80% higher for Mega-Banks than for Community Banks.
FDIC just released the updated Quarterly Banking Profile report for 4th Q 2010. Assessment of the report is a must for all Bank Executives (as well as Credit Union executives) as they evaluate their strategic plans and growth initiatives for 2011. 91% of the 7,657 Banks in the country are described at Community Banks with assets less than $1b; another 560 Banks are larger Community Banks / emerging Regional Banks with assets between $1b – $10b, and 107 Banks classified as mega-banks with assets greater than $10b. However, the 107 mega-banks control the vast majority of the market based on Assets and Deposits. On the flip side, the Community Banking segment that represents nearly 7,000 Banks and accounts for 91% of all institutions controls less than $1.5 trillion in assets and less than $1.2 trillion in deposits. Yet, the Community Bank sector is performing much better [Read More...]
We believe that demographics and legacy decisions about branch locations will have severe repercussions for many Banks and Credit Unions. Executives in these institutions should be proactive in examining their specific situation, as well as exploring opportunities to grow their addressable market via “virtual branches”.
Bank Innovation recently started a discussion on Innovation within the Banking Sector. This is a topic ‘near and dear’ to me as I believe that Banks – and particularly Community / Regional Banks must take a leadership role on Innovation, if for no other reason than just pure survival. The following are my comments on Innovation in the Community / Regional Bank sector: Innovation is hard work and not everyone is capable. In large banks, there are typically a handful (literally) of people who are capable of thinking outside the box. These individuals contribute ideas and push hard to see them through the labyrinthine go-to-market process. Smaller institutions typically do not access to these types of individuals and/or their skill sets. My view is that what will emerge is a bifurcation in the industry – value added and commodity based services. Most retail banking services, are by definition commoditized, and [Read More...]
Thomas Brown of BankStocks.com reported from the Bank Director magazine’s annual “Acquire or be Acquired” conference in Phoenix that which we have all known for some time: regulatory pressure is escalating at an exponential rate competitive pressures are increasing As a result, scale is required to compete in today’s environment. It is widely believed that any bank under $1b assets will be challenged. The problem is that few buyers are interested in anything other than pristine organizations that present a meaningful opportunity.