Emily McCormick:

Consolidation isn’t killing community banking, but it is changing the landscape,and significant challenges remain.

Originally posted on The Bank Spot:

An argument that I hear occasionally is that consolidation of the U.S. banking industry has put community banks on a path towards extinction. Two economists at the Federal Deposit Insurance Corp. have shot down this theory in a new research study whose findings are counterintuitive.

On the face of it, the industry’s consolidation over the past 30-plus years has been pretty dramatic. The FDIC says there were approximately 20,000 U.S. banks and thrifts in 1980, and this number had dropped to 6,812 by the end of 2013. A variety of factors have been at work. The biggest contributor, according to the study, was the voluntary closure of bank charters brought about by deregulation, including the advent of interstate banking. A lot of the “shrinkage” that occurred between the mid-1980s and mid-1990s wasn’t so much the disappearance of whole banks as it was the rationalization of multiple charters by the same…

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The Changing Face of the Consumer


The Pew Research Center just released some fascinating research on the The Next America, detailing the demographic changes they expect to occur in the U.S. through 2060. It’s really great, engaging information that I think anyone should read, but bankers in particular should note how the customer of today will become the customer of the future. While Pew’s research looks almost 50 years ahead, the information is based on trends that are happening now.

So what do bankers — and anyone in business, really — need to know?

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Decline in Branch Banking, or an Evolution?

treesroadunsplashSeveral news outlets have picked up on recent data from Bankrate.com revealing that 30 percent of Americans haven’t visited a branch in at least six months, among them Time.com, which called it the one stat big bank CEOs are freaking out about.

Half of Americans visited a branch at least within the last month, 64 percent within the last six months and 73 percent in the last year. A request to Bankrate.com for past data on branch visits was not answered.

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Emily McCormick:

I’m so very proud of the work we did with Sai Huda of FIS, which made its way into the WSJ’s Risk & Compliance Journal late last week. You’ll find the complete results to the 2014 Risk Practices Survey here.

Originally posted on About That Ratio:


As the sun shines down on Washington, D.C., some “light” Saturday morning reading on the Wall Street Journal’s Risk + Compliance Journal this morning:

Banks with a separate board-level risk committee report a higher median return on assets and return on equity compared to banks that govern risk within a combined audit/risk committee or within the audit committee, according to the Risk Practices Survey from Bank Director and banking and payments technology company FIS. The survey found smaller banks are adopting risk practices required only of much larger companies, and that almost all banks with more than $1 billion in assets now have a chief risk officer and 63% govern risk within a separate risk committee of the board.

To read the full piece on recent surveys and reports dealing with risk and compliance issues, click here.

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Originally posted on About That Ratio:

Good things come in threes — like insightful/inspiring meetings in New York, Nashville and D.C. this week.  By extension, keep an eye out for a Sunday, Monday and Tuesday post on About That Ratio .  Yes, I’m heading to Chicago for Bank Director’s annual Chairman/CEO Peer Exchange at the Four Seasons (#chair14) and plan to share my thoughts and observations on issues like strategic planning, risk management and leveraging emerging technologies each day.  Finally, I hope the three points I share today (e.g. a look at what the future holds for branches to a rise in public offerings) prove my original sentiment correct.


I’ve been surprised… by the # of conversations I’ve had about branch banking.

With many of the mega and super-regional banks focused on expense control, I find myself talking fairly regularly about how these institutions are taking a “fresh look” at reducing their branch networks.  Typically, these conversations trend towards well-positioned regional and community banks — and how many now look to branch acquisitions…

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Financial Research: Building for Growth (Means Getting Risk Right)


A bank’s approach to risk management may be impacted by its plans to grow. The Dodd-Frank Act requires publicly traded banks with more than $10 billion in assets to establish a separate risk committee of the board, but Bank Director‘s 2014 Risk Practices Survey, sponsored by FIS, found that more than half of banks with between $1 billion and $5 billion in assets have proactively established a risk committee, despite not being required to do so.

Comparing this to the results of the 2014 Bank M&A Survey may indicate that stepping up the bank’s approach to risk management may be directly tied to strategic growth plans. This survey found that 68 percent of banks with between $1 billion and $5 billion in assets plan to buy a bank this year. These banks also made more acquisitions in 2013, including healthy bank deals, FDIC-assisted transactions and branch purchases.

Getting the ducks in a row on risk management is a crucial step to ensure future regulatory approval for any acquisition that may take the bank north of $10 billion. When I spoke with him last October, Midland States Bank CFO Jeff Ludwig indicated that the bank’s good relationship with its regulators typically resulted in relatively quick and easy approval for deals. This good relationship was founded not only on transparency, but also meeting regulatory expectations.

Midland States has made a significant investment in risk management ‘so the regulators can see that we’re building the infrastructure ahead of our growth.’

The 2014 Risk Practices Survey strongly indicates that a focus on risk management results in better financial performance.  Respondents from banks with a separate board-level risk committee report a higher median return on assets (ROA) and higher median return on equity (ROE) compared to banks that govern risk within a combined audit/risk committee or within the audit committee.

The survey also reveals several best practices for bank boards and management.

Research: A Look Back at Risk

ImageIn early 2013, the chief risk officers and directors who responded to Bank Director’s 2013 Risk Practices Survey demonstrated a lot of confidence in how their banks managed risk. Despite challenges posed by the regulatory environment, as well as concerns about maintaining the technology and data infrastructure to support risk decision-making, the vast majority said they were confident in their institution’s ability to manage risk across all lines of business. With increased attention reported at the board level, it’s no surprise that risk has grown to be top of mind for bank boards, and with almost 70 percent reporting that the bank had an enterprise risk management (ERM) program in place (and another 12 percent transitioning to ERM), this confidence was understandable.

Next week will see the release of the results to Bank Director‘s 2014 Risk Practices Survey, sponsored by FIS. This survey broadens the audience to banks below the Dodd-Frank threshold of $10 billion in assets, and will offer some real insights into how these smaller banks approach risk. Instead of looking into how confident banks are in the management of risk, we’ll take a quantifiable view of how developed these banks’ risk programs are, as well as how developed their approach is to risk management. You may be surprised by some of the findings. Stay tuned.