Tuesday, October 22, 2013

ABA 2013: Banks Bounce Back

The ABA 2013 conference in New Orleans has just drawn to a close.  Banks are bouncing back!

Most of the attendees were C-Level execs from small, community banks with assets of <$1B and they were mostly from the Southeast given that the venue was New Orleans this year.

Dodd-Frank is in the midst of being fully implemented with tighter lending guidelines for QM or Qualified Mortgages hitting in Jan 2014, however, the head of the CFPB stated that there would be a gradual easing in of the guidelines with little to no litigation in the first few months.  The bottom line for the small banks was that if they have a traditionally good track record making loans in their markets with acceptable loss rates, this new legislation should have little or no impact.  The reaction of the CEO's ranged however from from activist "we should show up with thousands to march on Washington" to more resigned "let's not dwell on the regulation but focus on our business." 

The attitudes of the CEO's matched almost exactly the geographies from which they hail.  The West Coast CEO focusing on a vibrant, young work force, the East Coast bank implementing new technology but only to the extent that it would pay off with its specific customer profile.  The CEO from a deep south bank explained how his bank's branches had been "slabbed" during Katrina, a verb meaning completely demolished save the cement slab upon which the building used to sit.  But the employees were at work the next day at fold-out tables doing business, ultimately handing out up to $100M total in cash to bank customers needing money to evacuate immediately.  I'm not sure what was more moving - the image of employees at those tables in front of their erstwhile branches, or the news that the bank experienced less than 1% loss from this cash handout despite the complete lack of ID validation.  "How can you force someone to produce ID, when you can plainly see that they 'swam' out of their house this morning."  This, said the CEO, is proof positive that we are still a nation of trustworthy individuals.  This particular bank has expanded rapidly since Katrina, capturing a double digit increase in market share right after the storm.  How's that for a positive customer experience?



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