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Order in the Meeting: Dealing with Difficult Shareholder Meetings

the-bank-accountOn our twentieth(!) podcast episode of The Bank Account, Jonathan and I take the opportunity to discuss tips for how to approach challenging shareholders or circumstances at your annual meetings.

Unfortunately, Jonathan had a brain freeze during recording, and forgot to use his favorite Mike Tyson quotation, “Everyone has a plan ’till they get punched in the mouth.”  That said, planning ahead for disruptive shareholders is almost always worthwhile.

Providing a written agenda and set of governing rules to attendees can further help establish and maintain order, but it often comes back to simply ensuring that the disgruntled shareholder is provided an opportunity to be heard.

We’re also thrilled to announce that we’ve updated our recording microphones.  While our voices and ideas are unchanged, we hope you will find your listening experience improved.  We also want to thank all of our listeners for their comments and feedback.  We’ve heard from many of you via e-mail, twitter, phone calls and even in person  face-to-face meetings.  As we recorded this episode, we had already reached 5,000 downloads, including listeners in 39 states and the District of Columbia.

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Do Banks Need a Holding Company?

the-bank-accountOn April 11, 2017, Bank of the Ozarks announced that it would be completing an internal corporate reorganization to eliminate its holding company.  As a result, it will continue as a publicly-traded, stand-alone depository bank, without a bank holding company.

In this episode of The Bank Account, Jonathan and I discuss the advantages and disadvantages of the bank holding company structure.  Specific topics include:

  • praise for Bank of the Ozarks innovative approach to further improve its already impressive efficiency,
  • a review of the existing landscape of holding company and non-holding company structures,
  • activities that may require a holding company,
  • size-related thresholds impacting holding company analysis,
  • charter and corporate-governance related elements to the analysis, and
  • the impact the absence of a holding company may have on merger and acquisition activity.

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Thoughts on Payment Systems for Banks

the-bank-accountJonathan and I sat down with our colleague, Stan Koppel, on Thursday, April 13th to discuss the intersection of payment systems and banks.   Stan joined Bryan Cave LLP following a 28-year stint with VISA, where he was originally the third lawyer employed.  In this episode of The Bank Account, Stan shares his background and touches on what’s working now and what’s ahead in the payments world for financial institutions.

Topics covered include banking the unbanked, tokenization, the blockchain and machine learning!  Preview of a hot take from Stan… “blockchain is more distracting than disruptive.”

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Landscape of the U.S. Banking Industry

From 2006 through 2016, the number of insured depository institutions in the United States has fallen from 8,691 charters to 5,922, a decline of 2,769 charters or a 32% loss.  This headline loss number is worth talking about, but is neither news nor new.  The loss of charters is a frequent source of discussions around bank board rooms, stories from trade press, and chatter at banking conferences.  The number of insured charters has also been in steady decline, with at least 33 years of declining numbers.

However, a deeper dive into the numbers reveals some unexpected trends below the headline 32% loss of charters.

the-bank-accountNote:  We’ve also recorded an accompanying podcast for The Bank Account on the Truth About Industry Consolidation.  The podcast contains additional analysis to the numbers presented here, and is a useful addition, but not a substitute, to this content.  In addition to listening to this episode, we encourage you to click to subscribe to the feed on iTunes, Android, Email or MyCast. It is also now available in the iTunes and Google Play searchable podcast directories.

Links to items mentioned in the podcast, or otherwise potentially of interest on the topic:

 

State of Banking Landscape as of December 31, 2016

As of December 31, 2016, we had 5,922 institutions with $16.9 trillion in total assets.

The four largest depository institutions by asset size (JPMorgan, Wells Fargo, Bank of America and Citi) hold $6.84 trillion in assets, or 40.5% of the industry’s assets.

There are 111 additional banks that have assets greater than $10 billion, holding $6.98 trillion.  That’s 1.9% of the total charters, holding 81.9% of the aggregate assets.

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Establishing a Sustainable Sales Culture

the-bank-accountWalt Moeling joined us on March 29th for the latest episode of The Bank Account with a lively discussion of bank sales tactics.  In this regulatory environment, banks need to balance growth goals with expectations for scrutiny of their sales tactics.  Regulators, investors, the press and consumers are all paying more attention to bank sales tactics.

While none of us hopes to be asked whether we “want fries with that?” as we conduct business with a bank teller, looking out for potential bank products that could benefit the bank’s customers presents an opportunity for both the bank and the customer to be better off.

You can also follow us on Twitter with Walt (kind of) at @MoelingW, Jonathan at @HightowerBanks, and me at @RobertKlingler.

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Georgia on my Mind: Changes in Banking Laws

the-bank-accountOn March 28, 2017, Jonathan and I sat down with Bryan Cave Colleagues Ken Achenbach and Crystal Homa in the latest episode of The Bank Account for a discussion focused on legislative changes in Georgia affecting banks, including modifications to Georgia’s business judgement rule and the Department of Banking & Finance’s Housekeeping Bill.

While the bills we discuss await the Governor’s signature (and subsequent effectiveness – July 1 for the business judgement rule change and 30 days after signature for the housekeeping bill), our team looks forward to the practical effect of these statutory changes.  As banking industry participants, we appreciate the efforts of the legislature to make Georgia an attractive state for banking.

As referenced in the podcast, we also encourage you to check out our prior The Bank Account episode about the role of bank directors post FDIC v. Loudermilk, and Crystal’s earlier post on providing banking services to minors.

You can also follow us on Twitter with Jonathan at @HightowerBanks, Crystal at @CrystalHoma and me at @RobertKlingler.  Ken cannot be followed on Twitter, as Ken’s thoughts cannot be limited to 140 characters.

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The Strategic Approach to Vendor Negotiations

the-bank-accountOn March 17, 2017, Jonathan and I sat down with Bryan Cave Partner Sean Christy in the latest episode of The Bank Account for a discussion of the FDIC’s Office of Inspector General’s Report on Technology Service Provider Contracts.  Before diving into the OIG report, Jonathan and I briefly discuss the potential impact on deposits with regard to the Federal Reserve’s latest increase in rates, the OCC’s draft supplement for fintech bank charters (and related BankBryanCave.com blog post), and the change in Federal Reserve policy lessening the examination of certain smaller bank mergers.

Sean is a partner in our Strategic Sourcing group, and has significant experience representing bank and other financial services providers in the negotiation of the their technology contracts.  In this episode, Sean helps us look at the key takeaways from the February 2017 FDIC OIG’s report on Third Party Service Provider Contracts with FDIC-Supervised Institutions.  Sean provides some practice advice for institutions as they approach negotiations with their service providers, and also breaks down some of the common issues identified in the report that he also regularly sees in the contracts he reviews.

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Riding the High Stock Price Wave

the-bank-accountOn March 7, 2017, Jonathan and I recorded lucky episode 13 of The Bank Account where we discussed the implications of stock prices, particularly in connection with bank mergers.  We note that the current levels of stock pricing in the banking sector appears to be driven by expectations for higher interest rates, tax reform, and regulatory relief, in that order of likelihood and importance.  We also note that if these expectations aren’t achieved, bank stock prices are likely to take a hit.

As mentioned on the podcast, Jonathan was recently quoted in an American Banker story on bank merger activity.

“We’re telling buyers to be aggressive and sellers to be thoughtful,” said Jonathan Hightower, a lawyer at Bryan Cave. “The potential for legislative changes, lower corporate taxes, higher rates and reform to Dodd-Frank … are already priced into bank stocks. There could be a pullback if any of those things don’t occur.”

Subsequent to recording, the American Banker also published an excellent look at increasing skepticism for the chances for meaningful regulatory relief.

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Selling Your Mission to Shareholders

Selling Your Mission to Shareholders

February 27, 2017

Authored by: Robert Klingler

the-bank-accountOn Friday, February 24, 2017, Jonathan sat down with our colleague, Kevin Strachan, to discuss ideas for banks to highlight community involvement in their shareholder meetings.  As mentioned during the podcast, I had the pleasure of judging the next generation of transactional lawyers at a LawMeets competition hosted by Emory Law School, but I enjoyed consuming this podcast as a listener.

Before diving into shareholder engagement, Jonathan and Kevin also comment briefly on the leaked Hensarling memo on version 2.0 of the Choice Act, and some of the “interesting” banking ideas expressed by Bruce Cahan, adjunct professor at Stanford University, on a recent American Banker podcast episode.

On this episode of The Bank Account, Jonathan and Kevin touch on some excellent examples of shareholder engagement, including:

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Roundtable on the Future of Retail Banking

the-bank-accountOn Friday, February 10, 2017, Jonathan and I sat down with our partners, Jim McAlpin, head of Bryan Cave’s Financial Services practice, and Dan Wheeler, head of Bryan Cave’s Fintech practice, to discuss the impact of financial technology on retail banking.  Like branching strategies, there isn’t necessarily one universally correct strategy with how community banks should address financial technology, but ignoring fintech completely is unlikely to be a viable long-term strategy.

On this episode of The Bank Account, Jonathan, Jim, Dan and I explore some possible approaches for addressing fintech, and relay some of the reactions that we’ve heard from successful community banks.

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