Aug 082013
Business Strategy Essential for Community Banks and Credit Unions

Business Strategy is what sets apart the leaders from the pack.  Given the sharp changes in the competitive environment facing Community Banks and Credit Unions, a coherent and executable Business Strategy is more important than ever. A recording of a recent webinar and presentation slides presented on the topic of Why Business Strategy is Essential for Every Community Bank and Credit Union are provided below.   Recorded Webinar Video:   Presentation Slides: [slideshare id=25038553&doc=businessstrategyforbanksandcreditunions-20130807-130807163112-phpapp02]   As always, we welcome your comments.

Jul 302013
M&A for Community Banks: Dead or Alive?

M&A is not dead.  But the volume of Acquisitions in 2013 is trending below 2012 activity which in itself was a disappointment.  This is due in part to the significant gap in the perception of value between acquirers and targets (sellers).  Sellers continue to be frustrated with sub par P/B multiples (ie P/B multiples below book value) though this ought not come as great surprise given the circumstances facing most Community Banks. M&A and acquisitions specifically are obviously a topic of interest to many Community Bank executives, and we are devoting some time to this opportunity in our upcoming Business Strategy Webinar.  In advance, here are a few factoids that should illustrate the challenges and temper expectations for M&A in the Community Bank segment.   Trading multiples of publicly held Banks shows that most are trading at a discount to Book Values, though the larger Community Banks – those with assets between $500 million to $1 billion – trade at near Book Value.  Yet another metric showing the importance of scale – the smaller of the Regional Banks – those with assets between $1 billion to $5 billion – are trading at 1.2x to 1.3x Book Value, and the $5 [Read More…]

Jul 252013
Factoid: Community Banks Trading At Discount To Book Value

Many Community Bank executives are counting on the return of the days of 3x Price to Book Values (P/B).  Unfortunately, the current environment is not cooperating with publicly-traded Community Banks priced at significant discount to Book Value.  Small Community Banks – those with less than $500MM in assets – are trading at just 70% P/B, while larger Community Banks – those with assets between $500M – $1b – are trading at just 90% of Book Value. But even more worrying is the historical perspective of P/B values which shows that smaller Community Banks have not seen pricing north of 1.5x P/B while the larger Community Banks enjoyed 2x P/B valuations for only a short period of time during the past 20 years, according to Monroe Securities’ presentation during WIB’s 2013 Annual Conference for Bank Presidents, Senior Officers and Directors in March 2013. Tell us what you think Where are Bank valuations headed from here? (polls)

Jul 192013
Free Webinar: Why Every Bank and Credit Union Needs a Business Strategy

Serge Milman, Principal Consultant at SFO Consultants is pleased to present a Free Webinar to Community Bank and Credit Union executives on the importance of Business Strategy to growing revenues, improving loyalty, and enhancing operational performance. Community Banks dominate the industry with 91% of the total institutions, but generate just 8% of the industry’s profits.  Intense competitive pressure from traditional and non-bank competitors is exploding with ‘too much money chasing too few good deals’ leading Banks and Credit Unions to sacrifice yields and/or suffer from collapsing loan portfolio both of which result in deteriorating ROE. The panacea is on to find a solution, and many are turning to tactics including serving the un/under-banked, GenY, deploying PFM and P2P capabilities, engaging in the cut-throat game of competition based on price, while some have determined to follow the ‘hope and pray’ strategy. Regardless of the approach, most Community Banks are seeing a deterioration of their value, with trading values (for public Community Banks) and average acquisition multiples (for Community Bank acquisitions) at substantially below 100% Book-to-Value. Deploying tools, capabilities and addressing new customer segments may make sense for some, but does it make sense for all Community Banks?  In the landscape of [Read More…]

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