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2015′s First 15 – #4. Banking as Reviving: Can I get a witness?


Reviving the community financial institution through giving, living, and believing.
© Steve Mann | Dreamstime Stock Photos

Giving. Living. Believing. As you can see from the key words in our recent posts, we are into gerunds here at Reconn Consulting. Our last one in this series, reviving, encapsulates the first three. Let me explain.

What is a revival? You might describe it, as some dictionaries do, as a time of reawakening or a sense of restoration. The community financial institution is evolving as it continues to provide a sense of place and people in communities across the country. It also needs a bit of reviving. This exercise does not discount the effort put forth by community FIs across the country. Not at all. It begins to understand and calibrate the challenge that awaits, and where our focus should be.

The community changes. Moving from a terrestrial community, defined by physical and environmental boundaries, to a virtual community remains a fundamental component in the massive shift in the industry. Along with growing regulation and unheeded consolidation and scale economies, community financial institutions seemingly don’t stand a chance. Some, admittedly, will not make the journey. However, and with an eye to optimism, some will make it and continue to be successful. Reviving banking is a journey that begins with the following three steps.

Give it your all. Give it without expectation. It’s not charity, but it’s work. Raise the social consciousness of your institution and I firmly believe you will be rewarded, having never asked for anything. And, as I said, it’s not charity. Do what you have to do and move on. You are the catalyst for good in your communities and not just by the checks that you write and the dollars that you raise. Your work is your gift. Your work is your revival, and it matters not whether it is bricks and sticks or bits and bytes.

Freedom of expression and freedom of motion. Customers out there live for these things. Enhancing the life of our communities should be a paramount goal for your financial institution. The measures change now, too. So, it is not about how well you are doing, but it is about well the customer is doing. Beyond that, how is the life in your community-at-large changing? We say this understanding and appreciating that there are other factors in play beyond the community financial institution’s influence in any given area. We believe that your influence is part of your revival.

Delivery is the culmination of your work and your influence. Recheck systems. Update your people, and in most cases, your systems. Better your process. Scale will be an important ingredient in your long-term survival. To build scale, you need more customers. Not only that, but you need your customers, the ones you feel you can best serve. Their belief in you aids in your revival.

A final thought is this: don’t let them see you sweat. In the classic religious sense of the word, revivals, and the tent or temple in which one gathers, are oftentimes places where incredible journeys take place. They are not easy. There will be failure, there will be success, and there will be many days of, well, a whole lot of nothing. Steady yourself and your team through it all, which, in turn, is an altogether different revival.

Reconn Radio: Podcast #12 – Week of 02/24/2014


The Economy, Investment Services & Farewell to Spangler

This week, I discuss the economic items for this week. We also delve into investment services with our special guest, Joel Beck of the The Beck Law Firm. Joel brings a wealth of information on broker/dealers and general considerations in forming an investment business unit for your bank or credit union. You can learn more about Joel on his website,, or follow him @brokerdefender. Finally, we say farewell to Harold Ramis. He has, indeed, crossed the stream. May he rest in peace.


To listen to more of our podcasts, then please click here.

Reconn Radio – Podcast #10 (Week of 02/10/2014)


Bank consolidation. Maybe. Perhaps.

Liquidation. Other People’s Money. Maybe. No. Definitely.

This week on the radio program, we discuss the economy, bank M&A, and DeVito and Peck. We are into double digits here at Reconn Radio.


P.S. For more information on bank M&A activity, with those spiffy charts and graphs, check out the accompanying blog post here.



Bank Consolidation in this Millennium

The tragedy and comedy inherent in our banking system reminds me of a Steven Wright line: “You can’t have everything. Where would you put it?” Darn funny stuff from Mr. Wright.

The consolidation of banks, thrifts, and credit unions continues. Our curiosity got the best of us and we wanted to see how fast or how slow in terms of deals and values. The following charts highlight data on bank and thrift deals since 2000. All data is courtesy of our friends at SNL Financial.


The number of deals has actually slowed after the 2008 redux. That makes sense. Many deals in 2009 and 2010, as one can see in the second chart of the dashboard, were government-assisted deals. One can imagine that bankers are waiting on the sidelines in hopes of gaining higher and higher multiples. However, franchise value, from our perspective, will come from a couple of things: 1) size and 2) demonstrated leadership and technological/organizational nimbleness and scale. Furthermore, government-assisted deals are waning and doing so quickly. That’s a good sign. Institutional euthanasia is just wrong.

It has often been said that this industry is highly commoditized. We think that is a fair assessment. What strikes us as interesting is that no one really loses sleep if there are fewer institutions. It’s not really the same when compared to say gold bullion or copper plating. Panic sets in and prices rise.




We’ve represented dollar value of deals in two ways below. The first, Total Deal Value, shows a pretty murky market. The Total Assets data speaks to the relatively small size of the institutions coming to the altar.


We’d rather have something than nothing

Overall, there’s just not much action in the consolidation business right now. Ultimately, this should not keep FI executives from seeking out deals. We believe that there is growing demand for bigger and better. Scale economies mixed with the right assortment of service technology and outstanding human resources will win over customers.

It’s true. You can’t have everything. However, one can plan for the advent of just about everything – from force majeure to what is the correct path for your institution and its stakeholders. This doesn’t mean that one has to predict the future. That, after all, would be having everything and Mr. Wright has already demonstrated there’s no place for that.

For assistance looking at markets, operations, and financial impact for your community financial institution, give us a shout. Or, if you like, you can whisper our name in the wind. It all works. Call us at 908.368.1270 or complete our contact form here.

02/10/2014 – Our weekly perspective on the economy

The economy continues to show signs of uneasiness. Last week, we saw a surprising drop in the Institute of Supply Management’s Report on Business. What was most shocking to us, as pointed out by Marketwatch, was that we had, “the biggest one-month reversal in the new-orders index since December 1980.” The new-orders index is a component of the ISM. You can get to the ISM report here. This added to the already dower mood on Wall Street. The DJIA is down 3.96% since January 10, 2014, or approximately 650 points. Get the chart here.

This week brings more interesting news on the consumer confidence front as well as Janet Yellen’s testimony to both the House and Senate. More detail can be found on Marketwatch’s calendar here. We’ll keep you posted. Always keep one eye, or half an eye if you can manage it, on the macroeconomy.


Reconn Radio – Podcast #9 (Week of 02/03/2014)



Reconn Radio brings you its second guest in as many weeks. Also, we’re announcing our joint venture with strategic partner Structure First. Please check out the headquarters planning and facility development collaborative at






Where are they now? US Financial Institutions (less than $5B) as of June 30, 2013

I find the nostalgia pieces about burned out movie stars and TV teens, well, interesting. Though the industry many of us work in is not quite as, well, interesting, it does tend to have its own nostalgia. Where is everybody? What do they look like today? Will they be here tomorrow?

On our journey to analyze individualized, institutional concentration risk, which is based on our earlier post on the same topic, we thought we’d take a slight detour and see exactly where they are today: Commercial banks, savings banks, and credit unions. With an interest in community financial institutions, we thought we would limit it to institutions of $5B or less in total assets.

Pictures have a way of turning your attention. The pictures below did the same for us. The numbers caught our eye, too. With 13,585 total institutions reporting, we find the following breakdown:

  1. 5,880 commercial banks with $1.93T in total assets, or $328.1M per institution.
  2. 924 savings banks with $412.0B in total assets, or $445.9M per institution
  3. 6,781 credit unions with $889.6B in total assets, or $131.2M per institution

Total assets were approximately $3.23T, or $237.8M per institution.  Makes you giddy, doesn’t it?

As you look at the maps below, please consider the nature of our country. We are a fiercely independent and free-spirited nation. However, we can’t help to look at the map, while considering some of the numbers, and wonder what will this mean for financial institutions below a certain dollar threshold or with business models that need an infusion. Can this stubborn independence last? Is it the best thing for the end user? It’s not if technology will have an impact, but how, when, and to what level. The vector of change has not yet shown itself as we believe it will in the future. We are just getting started.

Be prepared. Be thoughtful as a leader and as a follower. Galvanize your team around sound business decisions. Survival as is certainly is the preferable outcome. In many cases, union and partnership maybe the best option for the customer or the member/owner. If the latter is your chosen path, be it as the acquired or acquirer, be firm but know that none are your enemy. It’s what has to happen.

Also, please know that these maps will change.  That notion will survive all of us.

All data provided by SNL Financial. Data visualization built on Tableau.

All data provided by SNL Financial. Data visualization built on Tableau.


All data provided by SNL Financial. Data visualization built on Tableau.

All data provided by SNL Financial. Data visualization built on Tableau.


All data provided by SNL Financial. Data visualization built on Tableau.

All data provided by SNL Financial. Data visualization built on Tableau.


All data provided by SNL Financial. Data visualization built on Tableau.

All data provided by SNL Financial. Data visualization built on Tableau.

Digitization drives me to drink

Well, not really.  However, the almost one-sided debate over where banks and credit unions should head, whether they want to or not, just doesn’t seem to want to slow down. I get it.  I do.  The industry is facing a daunting task of providing a high-fixed-cost, commoditized service to an audience that wants customization and lives on, seemingly, narcissism alone.  Furthermore, this task is based on the premise that individual industry players provide unique approaches to client service, service delivery, and pricing.  It’s a sublime thought, but it’s a bit farfetched, don’t you think?

So, enter digitization.  It’s a wonderful thing, the digital world.  I’ve long given up on fighting it.  With my smartphone at my side, I, too, have succumbed to the marketing:  It’s lure of efficiency and scale economics and it’s sleek, sexy sounds and sights.  Is life really better?  I don’t know. Define better.  Is the gauntlet run through life’s trials and tribulations any easier?  I think we could make an argument that it is the exact opposite (making my payment online versus mailing it does not, by any stretch of the imagination, portray a run without the gauntlet).  Is the financial services industry ready for the tumult yet to come? There is the widely-held belief that more consolidation and consecration are in our future.

If we were working in a commoditized industry before, then we will certainly be more steeped in the same going forward.  If at the end of all this we are seeking a world where we are free from work and swimming in riches, then my guess is we will all be shocked.  Whereas digitization was just the silent paramour in days gone by, today it is the front-and-center fascination of our financial lives.  But it’s not the purpose of our lives, financial or otherwise.  This, my friends, is the real journey:  fulfilling purpose.

Cheers. <clink>