Community Banks Feast on Subordinated Debt / ROBO-Advisor and Community Banks Form Alliance / Merger of Mutuals
Panel: Bob Kafafian, President and CEO; Jeff Marsico, EVP; Rich Trauger, Managing Director
Podcast Show Notes:
Our This Month In Banking (TMIB) podcast highlights significant news and events in banking and our hosts’ take on them, along with interviews with industry thought leaders. TMIB will be available on the last Wednesday of every month here, on Stitcher, Soundcloud, and iTunes for your listening enjoyment. Join us on your commute or at your desk.
Topic 1: Community Banks Feast on Subordinated Debt
Start time 1:30
Our first topic today is the rise in community bank subordinated debt issues. Banks with less than $10 billion in assets issued a total of $1 billion in subordinated debt through July 1, or nearly double what was issued a year earlier. For example, Univest Corp. of Pennsylvania issued $45 million of subordinated debt on July 1, adding to a $50 million sale last year. Univest’s CFO stated that they did not need to bolster common stock and they did not want to dilute existing shareholders. Why are we seeing an increase in issuance of subordinated debt? What do you think their exit plans are and what can go wrong?
Topic 2: ROBO-Advisor and Community Banks Form Alliance
Start time 10:20
Banc Alliance, a consortium of more than 200 community banks, partnered with the digital wealth management firm Personal Capital, a robo-advisory firm that reported more than $2.1 billion in assets under management and nearly 17,000 registered accounts as of May. Banc Alliance member banks cover 40 states and hold an average of $1.5 billion in assets. With this relationship, Banc Alliance member banks will be able to offer their customers access to Personal Capital’s suite of personal finance tools and digital wealth management services. Also, the partnership will extend Personal Capital’s reach to community banks across the country. Can this be the means that community banks use to serve their customers’ wealth needs?
Topic 3: Merger of Mutuals
Start time 20:53
The mutual model is shrinking and consolidation may be the best way for the model to survive, especially with the rising costs of regulation. Dollar Bank in Pittsburgh, a mutual which has $7.4 billion in assets, announced its first acquisition in more than 30 years, agreeing to acquire Bank @lantec in Virginia Beach, a mutual with $112 million in assets. As some smaller mutuals struggle to attract customers and employees, and invest in technology, can combinations be the solution?
Watch for episode 8 of This Month in Banking to be released on Wednesday, August 31, 2016 and a new episode on the last Wednesday of every month.
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