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BB&T, Webster and TCF announce redemption plans and other regionals are likely to follow in advance of new capital rules that take effect Jan. 1.
June 19 -
PacWest Bancorp in Los Angeles is attempting a hostile takeover just days after unseating Umpqua Holdings to buy American Perspective Bank. Industry observers say the company's newfound buying aggression might make it a better seller someday and give its PE investors a tidy exit.
May 9
Law firms often bring in outside advisers to help community bank clients, but Schiff Hardin has created its own advisory group.
The Charlotte, N.C., law firm last week launched Schiff Hardin Strategic Advisers, which will help small and midsize banks maneuver the new regulatory environment and rebound from credit problems.
Robert Piontek is the venture's chief executive and vice chairman. He is a former treasurer of the global investment bank arm of First Union and a former partner in KPMG Consulting's capital markets and investment banking group.
Steven Antal, the group's president, is a former general counsel at First Charter and a former senior lawyer at Wachovia.
Antal and Piontek worked together at Wachovia the 1990s. Wachovia sold to Wells Fargo in 2008.
In an interview, Piontek and Antal detailed what they expect to focus on and how they plan to apply lessons learned at one of the nation's biggest banks to advise struggling community banks. Here is an excerpt.
Some estimate that up to 40% of all banks are under some sort of regulatory order. Is helping them get out of those orders going to be your bread and butter?
Piontek: We can and want to help them do that, but another element is helping them figure out how not to get back into [trouble]. How do you better
We often hear from community bankers that it is not always easy to get their hands around the numbers.
The genesis of the relationship might be this more profound problem. But you want to make sure that once you correct something you want to go back and fall into the pattern that led you into that problem in the first place.
Antal: There will be some situations where we are looking at the next step, such as finding partners. We're not investment bankers, but we can help them write strategic plans or we can help them look at logical industry partners, because in some cases it may be a very tired institution.
I'm sure you'll be paid handsomely to answer this in depth, but give us a tip as to how banks can avoid going down the same path?
Piontek: Know who you are, know you want to be in the community and stay true to those values. If you do that, you can build a franchise that is unequal to anyone's because, in the end, when you look at the problems that banking faces in the last ten years and will continue to face, it is all about loyalty.
How do you rebuild confidence? You build it from the basis of who you are and who want to be. People will admire you and will be attracted to that.
Antal: Build more robust risk management models that can withstand a category four or five [crisis], instead of just a three, which may have been a typical course.
Loan growth is tepid and there is a temptation to reach. How do you counsel a bank that is hungry for loan growth?
Piontek: If you go into a space that you're not overly familiar with, you better be able to hedge your bet before you start.
A good example, back in the '80s, when we hit a prime rate of 20.5% to 21%, I was with First Union and Ed Crutchfield had just taken over as chairman and CEO. He was a strong asset-and-liability guy. I was heading up the asset and liability side and was doing analytic forecasting. He sent a message down to me, asking what the impact to the institution would be if prime went to 2% in 24 months.
Later, I was talking with him about the notion of the question and he said, "Bob, anything can happen. I want to see what the liquidity of my institution looks like at that level. I want it in the back of my head because the time will come when we will face those numbers." Knowing it ahead of time sure beats knowing it after the fact. It was a great lesson.
What do you think are the universal truths that community banks are having a hard time accepting?
Antal: The difficulty of dealing with bank holding company debt loads. It is creating a little bit of a liquidity issue with bank holding companies and their ability to support the banks. The banks might be under regulatory orders and can't pay dividends.
As much as anything, I think that a lot of what we will be doing will focus on how to simplify the debt structure and make the holding companies more liquid.
