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A Bank Director audience survey found that 91 percent of bank executives and directors are worried about competition from outsiders like Walmart, Google and PayPal. Bank Director Editor Jack Milligan addresses whether they really should be worried, or whether this is just a distraction from the bigger challenges plaguing the industry.

The Bank Spot

Walmart has announced that it is launching a money transfer service that will enable its customers to send funds from one store location to another at fees that are significantly less than many of its competitors. This is not the first time that Walmart has offered a money transfer capability – for the past 12 years it has provided a service with many more features through MoneyGram International – but now it is taking on more of a principal role.

Since 2011, Walmart has also teamed up with American Express to offer a prepaid card product called Bluebird that can be used in the same way as a debit card linked to a checking account, and provides its customers with a retail banking capability that does not come from a traditional bank. (American Express became a bank holding company during the financial crisis in 2008 so it could gain access…

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Is it time to love Bank of America?

Bank of America held their annual meeting yesterday, and according to many sources — including the Charlotte Business Journal’s Adam O’Daniel, who has a great account of this story — there was a Brian Moynihan super-fan in the house:

You are the finest CEO in America and the hope for America, Mr. Moynihan.”

“Up the stock to a million and I’ll marry you in the morning!

According to O’Daniel, Peggy McMahon has 22,000 shares of BofA stock, which is currently trading at just under $15 per share. Bank of America will need to make a lot of gains for McMahon to see her million. But Bank of America has put a lot of work into turning the company around, as Bank Director Editor Jack Milligan details here, and is poised for a “return to mediocrity”:

Meanwhile, JPMorgan Chase & Co. CEO Jamie Dimon told the audience at Euromoney Saudi Arabia conference in Riyadh that he sees unregulated, non-bank companies like Google and Facebook as potential competition, echoing the thoughts of 58 percent of bankers at Bank Director’s Growth Conference that said they were ‘very concerned’ about non-bank competition entering financial services.

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

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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Question #1: Does the CEO work for the board, or do the directors work for the CEO?

The Bank Spot

On March 6-7, Bank Director will host the Bank Board Training Forum in Nashville, an event that I believe will provide the 100-plus directors who will be attending (we’ve run out of room) with sound advice and counsel about how to run a high performance board. We created this event because the banking industry has gone through so many dramatic changes over the last few years, and bank boards are under so much pressure from the regulators and shareholders to meet these new challenges, that we saw the need to offer an educational opportunity that would focus on the performance of the entire board.

Over the course of the day-and-a-half program there will be presentations on audit, compensation, risk management and governance issues, on regulation and strategy – but always with the focus on how these issues impact the board and its role. The world of banking has changed and…

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The Bank Spot

The Federal Reserve Board waits five years to release the minutes of its official deliberations, and I imagine that ardent Fed watchers and monetary policy wonks have been waiting eagerly for the 2008 vintage transcripts, which cover a period of time when the financial crisis was coming to a full boil and the bank’s policymakers – including former Fed Chairman Ben Bernanke – were scrambling to keep things under control.

Last week the Fed released 1,865 pages of transcripts that included eight formal and six emergency policy meetings in 2008. The bank made a lot of controversial decisions that year. It arranged a marriage between the investment bank Bear Stearns and JPMorgan Chase & Co. when the former was judged to be close to failure, then stood by and did nothing while an even larger investment bank – Lehman Brothers – slid into bankruptcy, leading to a near meltdown in…

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Is a stricter set of regulatory expectations for risk governance long overdue?

The Bank Spot

The Comptroller of the Currency recently issued a proposed set of minimum standards for the risk management practices of national banks, and I think they provide the most definitive statement on the regulatory expectation for bank boards in the risk governance process that I have ever seen.

The proposed requirements were originally mandated by the Dodd-Frank Act of 2010, and would apply only to national banks with $50 billion in assets or greater that are supervised by the OCC – which is to say those institutions that pose the greatest systemic risk to the banking system and to the economy. But I think that smaller banks – certainly down to the $10 billion asset level, and perhaps even lower — should pay close attention to whatever rule is eventually issued because a slimmed down version could eventually apply to them as well.

Make no mistake, the OCC expects the board…

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Bank M&A Round-up

I’m still getting settled back in chilly Tennessee (23 degrees and icy!) and can’t help to take a fond look back at sunny Phoenix, Arizona, where just last week Bank Director wrapped its 20th annual Acquire or Be Acquired Conference.

Obviously, at a conference called “Acquire or Be Acquired”, a lot of discussion centered on buying and selling a bank. As our 2014 Bank M&A Survey with Crowe Horwath LLP found last March, pricing is still a concern, with 63 percent of potential buyers saying that pricing expectations are still too high. Underscoring that point, 35 percent say that coming to an agreement on price is the single greatest challenge in M&A:

The focus in Arizona wasn’t entirely on M&A. Speakers from the investment side — specifically, Curtis Carpenter of Sheshunoff & Co., John Duffy of Keefe Bruyette & Woods, a Stifel Company, and Stifel Financial Corp.’s Ben Plotkin — focused on issues of size, scale and profitability. I explored what they had to say about size HERE for BankDirector.com.