Every company wants to grow, but how you plan for growth can be a key differentiator for your company. At ConnectOne, we account for growth during our strategic planning and operate with the 3X principal. It’s important to think about whether today’s decisions, processes and strategies will be sustainable if you are three times the size. See more of my thoughts on growth and the 3X principal in the most recent segment of my Inc. Magazine Playback Series.
Posts Tagged ‘Community Bank’
Today’s post-crisis world is sprinkled with glimmers of economic hope as we witness positive upticks in the auto, retail and construction industries. Economic confidence is on the rise and consumer spending and borrowing are increasing. While this is all good news, small business owners need to be disciplined when developing a growth strategy. In my recent Forbes post, I discuss why common sense is key when planning for future growth. Click below to read my full post.
Recently, I visited Steve Schaefer over at Forbes to discuss the long term effects of the Fed’s decisions to stimulate the economy and what rising interests rates mean for the housing market & banking industry. We also had the opportunity to talk about the future of banking, the growth we’ve experienced here at ConnectOne and what it’s been like operating as a public company. Check out the full interview below.
Basel III, a global regulatory standard being applied to all financial institutions, is scheduled to roll out its first phase in 2015. The regulation has sparked much heated conversation amongst industry leaders since it sets one capital standard for institutions of all sizes and complexities. In my latest Forbes post, I discussed Why “One Size Fits All” Capital Rules Will Not Prevent Bank Failures, and will ultimately affect the small business owner. Implementing increased capital requirements and higher capital costs across the board will result in unintended consequences. What would be most beneficial is regulation with varying standards based on complexity and risk in order to develop a level playing field. You can also watch my thoughts on Basel III & Capital standards in my latest interview on Bloomberg TV’s “Bottom Line” below.
This week I had the opportunity to speak to PBS News’ Suzanne Pratt in our Englewood Cliff’s headquarters about the challenges facing the mortgage industry. She also spoke with our client Dr. Farnaz Safi, who came to us a few weeks ago after struggling with big banks. While Dr. Safi talked about her experience working with NJCB after her disappointment with a big bank, I shared my views on mortgage and credit policies and why North Jersey Community Bank is a “Better Place to Be.” You can view the full video below. I look forward to hearing your thoughts…
Tomorrow is “Bank Transfer Day” and certainly reminds me that one of the greatest assets of our business environment is the freedom of choice. While other countries may only have few banking options, here in the US we have over 7,000 banks to choose from. Those banks range in size from a few tens of millions to multi-trillion dollar banks. In these times of changing bank priorities, regulations, and business models, one should always keep focused on the banks that truly create lasting relationships with their customers. You have a choice.
At NJCB we hold the customer in the highest regard. Creating relationships is the business we are in. We have always provided products such as checking and debit cards for free along with many others that ran counter to the business plans of many other banks. It is our high customer retention rate, combined with the enormous word-of-mouth referral base that lowers our costs and allows us to provide the high level service at little to no cost to you.
Take this opportunity, especially if you feel you are in an “abusive relationship” with your own bank to move your account to a bank that cares about you, and sees you for more than just a source of fee income.
So on Saturday, November 5th make plans to move your money to your local community bank… Here at NJCB, WE will be open on Saturday from 9AM to 1PM and are ready to serve you, and make your transition smooth & effortless. If you are near one of our offices, stop by enjoy a cup of coffee at our coffee bar, and feel free to chat with one of our staff about why we are “a better place to be.”
Focusing on our core values of being “a better place to be” and serving as a catalyst for our clients’ success, we have continued our pattern of strong growth and meaningful profit. Our first quarter results demonstrate solid performance and consistent capital formation:
- Assets increased from $523 million in the 1st Qtr ‘10 to $631 million
- Loans increased from $406 million in the 1st Qtr ‘10 to $525 million
- Net income before payment of our Preferred Stock Dividend increased from $953 thousand in the 1st Qtr ‘10 to $1.5 million
- Quarterly Earnings per Share increased from $0.38 in the 1st Qtr ‘10 to $0.63
- Book Value per Share increased from $13.61 in the 1st Qtr ‘10 to $15.76
This strong, stable and consistent growth performance has gained the attention of those who follow financial institutions. Recently SNL Financial, one of the most respected Financial Analysts in the nation, published their annual “100 Best Performing Banks from $500 million to $5 billion in the Country.” I hope you are as proud as I am that NJCB was named as one of the nation’s “Top 5” best performing banks.
We continue to seize on the opportunities that are presented as the National Banks struggle to fix their balance sheets and in many cases discard many good business clients due to homogenized lending practices and nationwide decision making. Our ability to compete has only been strengthened by our relentless focus of providing superior customer service along with offering the finest set of products in the industry.
Even though the economy has stabilized to some degree, we continue to see weakness from the demand side of the equation. Borrowers continue to struggle in these uncertain times and, as a result, we continue to manage our portfolio in a conservative and stable manner. While we have seen no significant loan impairments to date, we continue to prudently increase our reserves to keep us in great shape, even if we find ourselves with additional non-performing loans in the future. Although we do not expect any significant losses from our loan portfolio, leaning into the wind appears to be the smartest course of action.
Articles abound lately extolling the large national banks’ desires to return to “customer service.” However, as these banks face shrinking revenues from their once-profitable credit and debit card fees, and the myriad of other changes that will be occurring in the post Dodd-Frank world, how can we trust that their so-called return to great customer service is truly genuine?
Is this really a change of heart?
As one of the founders of a true customer service oriented community bank, I find the actions of these national impersonal organizations to be not only reprehensible, but disingenuous. For banks like ours, this behavior is the “gift that keeps on giving”… As more people begin to see through the national banks’ actions, customers will flee and come to us – where they will feel the authenticity of customer service.
Wise consumers have moved in troves to community banks as their trust in this “talk the talk, but don’t walk the walk” environment has existed. In fact, the recent Associated Press article describes national banks placing more “customer service” representatives on their floors. Is this a true commitment to customers, or will this simply create more opportunities to grab wallet share from customers? We can’t compare this strategic move to help sell the customer more, with the same efforts employed by our true customer service-oriented banks who genuinely wish to serve you better.
At the end of the day, the large nationals only see ones and zeros, with algorithms that understand how to maximize profitability at all costs, whereas the vast majority of community banks see people, like you and me, and truly care about their customer’s needs and lifetime desires. A true customer service oriented bank is motivated, not by the dollar signs at the end of the day, but by knowing that each customer is walking away happy, satisfied and confident that his or her financial needs are being met.
The news these days is filled with concern that banks may not be lending enough, as if it is the banks responsibility to seek out and discover new lending opportunities whether they are needed or not. While it is true that lending plays a very important part of our economic fabric, prudent lending has become passé to some…
In fact, some of our customers at North Jersey Community Bank would tell you that we have consistently been a conservative, prudent, but understanding lender, and in many cases counseled them to borrow less, by demonstrating that their ability to repay should determine the level of indebtedness, which may have been one of the reasons for their survival in these financially strained times. Some learned that “the best transaction may have been, the one they didn’t do.” Others appreciated the fact that they could rely on us even through these times, as it is better to have a smaller line of credit that can be counted on, as opposed to having a much bigger line of credit which would ultimately and indiscriminately, be pulled because you should not have received it in the first place, or discontinue funding a project because the bank needs to shrink its balance sheet without regard for you the customer, as some of our competitors have done.
Equally as compelling is the number of potential customers who chose to go to other banks and financial institutions because the lending was cheaper, looser, without advise, and truly created “a be careful for what you wish for” scenario that has jeopardized their businesses, and may ultimately be the reason for their demise. It is these same individuals who now return to seek our counsel on how to unwind the onerous debt position that they have created.
Both of these groups now understand that part of their banker’s job is to be the “trusted advisor” that we so proudly advertise. We look not just to complete banking transactions, but to create long lasting customer relationships, and as in any good relationship, that sometimes means saying no…
This is a lesson that I believe everyone needs to understand… We have just come though a time when “no” was not an accepted alternative.. People bought houses they couldn’t afford, bought TV’s on credit, went on vacation on their credit cards, dined at restaurants too expensive because they could charge it, and for the most part, spent more than they could ever afford.
Banks, borrowers, and the economy in general, will benefit much more with a sustainable amount of debt supplied to the economy. It is the responsibility of the banks, all banks, to understand the role that they must play in order to support the economy, and businesses or consumers should seek out banks that look to share, and have a vested interest, in their growth and success…
Both will be much better off…
With all the talk of the Government Stress Tests lately, I thought some rational explanation was warranted..
First, banks have been required to stress test their balance sheets since their original formation, including any denovo institution. All banks undergo regular regulatory exams which include stress testing of their balance sheets under various, interest rate, credit risk and capital scenarios.
Second, the nineteen banks that are part of the “Stress Test” being discussed could not be in a more varied set of businesses… On one hand we have the largest deposit gathering bank in the country, and on the other, a bank with virtually no deposits or branches, and every other type of business that a bank holding company might have, including investment advice, mortgages, real estate, hedge funds, derivative products, insurance, etc… How is it possible that one test will identify the strong from the weak in this set of banks?
The Stress Test although well intentioned, has added a political side to appease the populist voice being heard by our leaders…
It is clear to me that none of these nineteen “too big to fail” banks can, or will fail the stress test… Instead we will hear about how our banking system is safe from catastrophe, and that some of these institutions may need some additional capital to weather an impending storm. If the institutions are unable to raise the additional capital in the private sector, then they will be able to use a new TARP II funding program. That’s when the fun will really begin.
Congress is not ready to appropriate more money to this cause; the banks will not like the terms of any new TARP II program…
And once again, we find ourselves concentrating on those that have created this mess, and looking for the best way to bail out banks that should be broken up instead. All this while the solvent, strong and functioning community banks receive no help, and worse, are being forced to pay a FDIC assessment which will substantially reduce not only their ability to lend, but will exacerbate the downward spiral of lower earning, lower share price, and difficulty in raising new capital.
Instead let’s look to support our community bank system and the economy by:
- Eliminating the FDIC additional assessment altogether
- Create a tiered FDIC fee arrangement that rewards traditional banks with a lower fee structure, and charges more for the bigger risk takers; peg fees to assets, not deposits
- Reducing the Regulatory and Tax Burden on Community Banks
- Incent more lending by allowing 1 & 2 Rated banks to lower their capital ratios; and/or provide a low cost TALF alternative geared toward community banks
- Support the Federal Home Loan Banks, allowing community banks to better participate with first time home buyers, and those seeking to refinance
Our leaders need to understand that it is the community banks that are currently expanding, lending, hiring, and growing profitably which is providing the fuel that economy so desperately needs. Let’s get on with the Stress Tests, and then take a step back, and look to support those that know how to get the job done (our community banks) and then onto how to re-sculpt the financial landscape so that we never have a systemic risk again…