Twitter Reacts to M&T / Peoples United Bank Deal

The headlines for subject deal, which dealmakers hope beyond all hope starts a robust bank M&A frenzy, were like the following:

(you can click on articles and tweets to enlarge)

Conversely, here are what some Twitter users thought of the deal, which starts with a factual tweet from yours truly. Keep in mind most tweets were from investors, not other stakeholders.

Any other reactions?

~ Jeff

Banker Quotes: As Told To Me v6

I learn a lot from bankers and industry experts as I visit their offices, speak to them on the phone or at industry events. Occasionally they will offer an insight that I think my Twitter followers would find interesting. Since I estimate my Twitter community only reads about 10% of their tweet stream, and so many of my blog readers do not follow Twitter, below are selected quotes that I tweeted since version 5.

Note that if the quotes exceeded 140 characters, I would have abbreviated or substituted some words to make them fit. So if you are a CPA and want to count, a few of the quotes may exceed the 140 here, but not on Twitter. I quote people anonymously to protect the innocent.

1. Me to bank CEO: How many customers left as a result of you consolidating a branch? CEO: 3.

If this bank's experience becomes typical, I see little reason to keep branches that have not proven to generate at least $25 million in deposits.

2. Bank CEO: Bloomberg says the duration of a 30 yr mortgage is 8-10 yrs. We think it's 29.5 years.

Not many borrowers will be running to refi their 3.5% mortgage any time soon.

3. Bank examiner: We're focusing on the interest rate risk from bankers reaching for yield.

Duly noted.

4. Bank Exec: The mortgage business only has a 30-day business plan.

Ever speak to the head of a mortgage origination shop? You wold be lucky to get them to think beyond the current pipeline.

5. Bank SVP: the mortgage lending business is like a shark. You have to keep swimming to breath.

And by the way, if Dodd-Frank tried to weed out bad actors in this market and put bankers back in the business, think again. D-F erected barriers to entry that makes it very difficult for your branch manager to talk to you about a mortgage.

6. Bank CEO: "You gotta have a dream. You may not realize it, but you gotta have one." Amen!

This is an emphatic statement about vision. Do you have a vision about where your FI is going that is clear, and resonates throughout the organization? This banker does.


7. Bank CEO: I get a lot of my financial industry updates from LinkedIn. 


Maybe social media is happening outside of the Marketing Department.

8. Bank branch construction firm CEO: The most common branch build remains 3,000-3,500 sq ft. Me: *sigh*

Old habits die hard. At least we won't have all the environmental problems that old closed down gas stations have when our branch is long empty and weeds are coming up through the parking lot cracks.

9. Bank CEO: Our current strategy is to satisfy the OCC.

What is the vision for your FI? Compliance? There's a sure thing for an enduring future. It should be noted that this bank was under a regulatory order.

10. CU Exec: We spend 30% of our time doing the right thing & 70% of our time documenting that we did the right thing.

How do you calculate that cost, Mr. Regulator?

11. Bank President: The government is intent on making banking a not for profit business. 

I thought the government was here to help?

12. Bank CEO: I'm currently a development loan workout specialist.

Two things to note here: 1) Development loans were the worst for most FI's during this recession, and 2) Lenders were generally terrible at working out their own credits.

13. Bank CEO: We do things better AND get better pricing.

I must admit I hit bankers hard on this issue in strategy sessions. I'm convinced Best Price & Best Service is not a sustainable business strategy.

14. Bank Analyst: The CEO is past the age where he should be home watching The Price Is Right.

This is a legitimate industry challenge. CEO's that hang on well past retirement age may think that there is nobody to do it as well as they did. Which is unfortunate. Because we need future leaders to do it differently.

15. NJ Banker and West Pointer Norm Beatty quotes Stonewall Jackson: "Never take counsel of your fear."

Amen Norm. Bring on the change!

What are you hearing out there?

~ Jeff

Note: To get banker/industry quotes as I hear them, follow me on Twitter @JeffMarsico

Banker Quotes: As Told To Me v5

I learn a lot from bankers and industry experts as I visit their offices, speak to them on the phone or at industry events. Occasionally they will offer an insight that I think my Twitter followers would find interesting. Since I estimate my Twitter community only reads about 10% of their tweet stream, and so many of my blog readers do not follow Twitter, below are selected quotes that I tweeted since version 4.

Note that if the quotes exceeded 140 characters, I would have abbreviated or substituted some words to make them fit. So if you are a CPA and want to count, a few of the quotes may exceed the 140 here, but not on Twitter. I quote people anonymously to protect the innocent.

1. Bank CFO to me: Whistling by the graveyard is the best of bad choices when looking at our parked deposits.

In the third quarter 2008, the average money market account had a balance of $72,823. Scroll forward to 3Q 2012, the average balance ballooned to $112,060. Do you think your duration assumptions should change?

2. Bank consultant: If the house is on fire, don't expect credit for finishing the basement.

Regulators will focus on the fire. Your carpeting job in the basement doesn't matter.

3. Car salesman to me: 98-99% of my 2012 sales were financed.

And auto loans performed well during the most recent recession. I suppose the saying is true: You can sleep in your car but you can't drive your house.

4. Bank CEO to me: A great relationship might get you 25bps on a loan. Covenants can get you another 25-50.

Skeptical. I would like to see this in action. So those with great relationships don't discount the price to "get the deal done?"

5. Bank institutional investor to me: "For banks to be relevant they should have 35% of revenue in fee income." Me: Profitable fee income?

Your level of fee income only matters if something drops to the bottom line. For many, the only thing left for the bank is the risk.

6. Bank CEO: We're feeling some [economic] recovery but why does it have to be so painfully slow?

It took US Bank two years to evict Kiss' Ace Frehley from his house after he stopped making payments and paying taxes. 

7. NJ Bank Exec: We have a handful of shore loans where we not only can't find the building, we can't find the land. #sandy

Real world problems.

8. Bank CEO: We need to fix our processes because I can't get the egg through the snake fast enough.

At a time of low loan demand, perhaps a process review is in order.

9. Bank consultant: If a regulator doesn't like your bank, there's always something they can find in Compliance. #tyranny

Unfortunately, true.

10. Retail Banking Exec: Until today retail deposit products were driven by the land of the free.

An industry self-inflicted wound. Agree?

11. Bank director: re-imagining the branch network will include complexity and drudgery. But it will be worth it.

I was surprised to hear this from a director. Usually, by change, bank director's mean switching to the tuna salad instead of the chicken salad.

12. Bank Chairman: In my business, getting something done quickly meant by Friday. In banking, it's in two or three years.

One reason: There are roadblocks to asking permission and penalties for begging forgiveness. But let's not forget the Sergeant's that run our bank that embrace change like my daughters embrace my opinion.

13. Bank CEO: We're doing so well because our competition is so bad. #classic

And many of you reading this are this bank's competition.

14. Bank Chief Risk Officer: Our biggest risk is regulatory grind. It is constantly wearing down our staff.

Let's not allow the final arbiter of our strategy to be the "no" person in compliance.

What are you hearing out there?

~ Jeff

Note: To get banker/industry quotes as I hear them, follow me on Twitter @JeffMarsico

Banker Quotes: As Told to Me v4

I learn a lot from bankers and industry experts as I visit their offices, speak to them on the phone or at industry events. Occasionally they will offer an insight that I think my Twitter followers would find interesting. Since I estimate my Twitter community only reads about 10% of their tweet stream, and so many of my blog readers do not follow Twitter, below are selected quotes that I tweeted since version 3.

Note that if the quotes exceeded 140 characters, I would have abbreviated or substituted some words to make them fit. So if you are a CPA and want to count, a few of the quotes may exceed the 140 here, but not on Twitter. I quote bankers anonymously to protect the innocent.

1. Bank Senior Lender on branch traffic: It's like groundhog day. They see the same people every week.

In addition to declining branch transactions, in-branch sales opportunities are pressured by the above reality.

2. ALCO Consultant: If your bank is making loans, forget about retail and fund with an FHLB advance.

Sad but true that the combination of operating expense and interest expense to generate retail deposits exceeds the cost of getting on the phone and calling your FHLB. But does it make your bank more valuable? In lieu of Hudson City Savings Bank sale price, I’m not so sure.

3. Me to bank credit consultant: What's the best leading indicator of a loan problem? Consultant: The borrower doesn't return your call.

How do you fit that square peg in your ERM round hole?

4. Bank chairman to me: It's difficult to have vision when you're fighting alligators.

This short-term thinking may be a key driver in future consolidation… community FIs with no vision for a sustainable future.

5. Bank chief credit officer relaying to me an OCC comment: "We haven't issued an asset quality upgrade in quite some time."

This is a telling statement since industry credit metrics have been improving for at least a year.

6. Bank exec to me: The public is starting to come around that community banks do not have to be thrown under the bus like big banks.

Thank you, public.

7. Bank CEO: That bad loan is in Seaside Hts. Me: Maybe it's Snooki. CEO: You know she's pregnant.

Who says bankers are out of touch?

8. Bank chairman to me: It would be interesting to know our branch's profitability.

Do you think?

9. Me to Chief Credit Officer/CCO: Isn't having a 3% delinquency rate on a 7% yield portfolio OK? CCO: The 7% thing would never happen.

Sad, but true. If you can’t get the yield for the risk, perhaps you should let the next guy/gal do the loan.

10. Bank retail chief: Saying customer service is our differentiator is a 'me too' position.

You mean everybody doesn’t have superior customer service?

11. Bank CEO: I think 4 FTE's is the right number for future branches.

Note that he was thinking out loud in a session designed to improve branch profitability.

12.  Bank CEO: My most demanding job is playing pen pal with my examiners.

To say that we have been forced to engage in flattery with our regulators is an understatement.

13. Bank loan consultant: There is too little a difference on yields between the best and worst rated credits in bank loan portfolios.

See my comment on getting paid for risk.

14. Bank consultant: Your strategic plan projections should drill down to a value proposition.

Agreed! Your plan should deliver increasing shareholder value, discounting projected earnings to present day value.

15. Bank examiner: When evaluating an acquisition, assume that every loan portfolio is worse than you think it is.

Told to a CEO who relayed it to me... and perhaps the Day 1 loan mark will be worse than you estimated.

16. Senior lender to me: Does it make sense to have my lenders calling on businesses for operating accounts when we are so liquid?

My answer was to hunt when the hunting is good, not when you’re hungry.

17. Me: Maybe Dodd-Frank will result in reduced compliance costs because CFPB streamlines regs. Bank CEO: That's not going to happen.

But the Treasury Department said it was going to happen.

What are bankers telling you?

~ Jeff

Banker Quotes: As Told to Me v3

I learn a lot from bankers as I visit their offices, speak to them on the phone or at industry events. Occasionally they will offer an insight that I think my Twitter followers would find interesting. Since I estimate my Twitter community only reads about 10% of their tweet stream, and so many of my blog readers do not follow Twitter, below are selected quotes that I tweeted so far this year.

Note that if the quotes exceeded 140 characters, I would have abbreviated or substituted some words to make them fit. So if you are a CPA and want to count, a few of the quotes may exceed the 140 here, but not on Twitter. I quote bankers anonymously to protect the innocent.

@JeffMarsico Bank head of branches: "All I need is time to sell, new shoes, and business cards."

jfb note: There are a lot of vendors out there selling the newest sales widget. But when it gets down to it, this banker gets to the heart of the matter. While typing this post, my bank called me from the local branch to tell me about their home equity lines! Third time my bank has called me in 16 years. Progress! But read the next quote.

@JeffMarsico Bank CEO: "People work at banks because they don't like to sell. It's how it has always been and still is."

jfb note: I think it is changing, though.



@JeffMarsico Bank Chief Risk Officer: "Not sure if ERM (enterprise-wide risk mgt) is theory or theology."

jfb note: Surprised that this came from the Chief Risk Officer because they are usually preaching the virtues of checking on the checkers that are checking on revenue generating bank activity. See my comments on ERM here.

@JeffMarsico Gas station attendant on free windshield inspection: "Sir your windshield looks great. To keep it that way, avoid highways."

jfb note: Ok, this has nothing to do with banking. But, seriously, this was his advice.

@JeffMarsico Bank analyst: "If there are such great returns to scale, then where are the Citigroup Inc. shareholders' yachts?"

jfb note: This was in a research note and not told to me directly. The economies of scale gang still can't answer this one. But a colleague of mine dubbed it "diseconomies of scale due to organizational complexity". I say I could have wiped out just as much shareholder value as Citigroup's Charles Prince for far less money.

@JeffMarsico Credit Union CEO: "The differences between CUs & community banks are inflated by trade groups. We should focus on big banks."

jfb note: This was told to me at a conference that was designed specifically to lobby the Federal government with the key issue being expanding CUs business lending. But, with the sum total of assets in CUs being less than JPMorgan Chase, it should make us wonder where community FIs should spend their energy. And don't count on your trade association to help you to target their largest contributors.

@JeffMarsico Bank exec: "If our regulator walked by our water cooler & saw that it was half full, they would write us up for it."

jfb note: Symbolic of the relationship between examiners and examined.

@JeffMarsico Branch banking exec: "We need to figure out how to give good service to rate sensitive customers & Nordstrom service to those that value it."

jfb note: Banks still struggle with the squeaky wheel philosophy of customer service... give the greatest service to those that make the most noise or are the most visible, versus those that are the most profitable.

@JeffMarsico Retiring Bank CEO: "I've been around (50 years) to see a few things. I've never seen an environment as difficult as this was for banks."

jfb note: Enough said.

@JeffMarsico Bank CEO: "If I don't know within 30 minutes of meeting w the borrower if the loan is a good one, I'm in the wrong business."

jfb note: I hope he meant in the context of the next quote.

@JeffMarsico Bank director on strategy: "I would like to make loans to borrowers that can pay us back."

jfb note: I agree with this strategy.

@JeffMarsico Bank director: "A great leader has empathy, sympathy, integrity, and consistency."

jfb note: I was impressed that a bank experiencing difficulties would speak about leadership instead of regulators, borrowers, lenders, etc. It inspired this blog post.

@JeffMarsico Mortgage banking specialist to me: "FNMA has $25B of pending repurchase requests outstanding."

jfb note: Well that's not comforting. One of my clients received a significant repurchase request from Fannie. If we sell them, but have to retain the risk, pricing and terms are going to have to change on residential mortgages.

@JeffMarsico Bank CEO: "In my 40 year career, it's never been easier to book loans." 

This is one of those counter-quotes... quotes that go against conventional wisdom. This bank is feeding off the castaways from large banks. I hope the castaways can pay the loans back.

@JeffMarsico Community bank CEO: "I'm fm a big bank and I was surprised I had to make holiday decoration decisions."

jfb note: Welcome to community banking.

@JeffMarsico Bank institutional investor: "Great banks have 1. Great asset qual, 2. Good IRR position, 3. Great efficiency ratio, and 4. Great sales/service."

jfb note: Always great to know because institutional investors own a significantly greater portion of community banks now than pre-2008, which leads to the next quote.

@JeffMarsico Bank analyst: "Attractive banks: have a lending niche and/or in strong economy; managed credit problems well; & have excess capital."

jfb note: I suppose if you asked 10 analysts and institutional investors you would get 10 different answers.

@JeffMarsico Bank CEO: "In a perfect financial year, you have done well if you don't have to think about your bank more than 10 minutes."

jfb note: The context was that banks should make it easy for businesses to perform banking chores.

Bank CEO: "We would have to be much bigger than we are to be a technology leader."

jfb note: Some still believe they can be a technology leader.

Bank CEO: "Ally Bank did an excellent job convincing the public that the opposite of the truth is true."

jfb note: This was in response to me citing a survey that showed Ally Bank one of the top recognized bank brands. Advertising saturation can work for those with the wallets.


Bank CEO: "We were surprised at quick adoption rate of our mobile banking app."

jfb note: Because bank customers used to be notoriously slow at adopting new delivery channels. Needless to say the turtle is making gains on the hare.


Bank CFO to me: "You were able to pronounce that branch correctly when you didn't have that beard."

jfb note: Wise guy CFO.


What have bankers been telling you?

~ Jeff

V-blog: From the desk of jfb. How should FIs use social media?

Financial Brand August 2010 Survey of Banks Social Media Presence
http://thefinancialbrand.com/13111/2010-bank-credit-union-online-marketing-study/

Frank Sorrentino’s (Twitter: @franksiii) Blog
http://www.bankingonmainstreet.com/

Susquehanna Bank’s blog
http://blog.susquehanna.net/

Chase’s Community Giving Facebook page
http://www.facebook.com/ChaseCommunityGiving