Around the Industry – February 2018

Cultivating money smarts—In Pelham, Ga., where median annual income falls short of $25,000, Pelham Banking Company helps local students achieve financial literacy by giving them a firsthand look at the way money moves and works across their state. For the past two years, the bank has sponsored a three-day trip for eighth-grade students called the Financial Education Georgia Studies Tour. The 2017 trip included stops at the Georgia Sports Hall of Fame, where students discussed the economic impact of tourism and enjoyed a picnic on the lawn; the World of Coca-Cola, where they discussed the power of employment; and the Georgia State Capitol, where they visited with a local representative to learn about his financial responsibilities for their state. The tour is one of many efforts the $80 million-asset community bank makes to help the next generation achieve financial literacy. Bank staff also teach a basic budgeting class at the local high school and help elementary school students learn how to operate a lemonade stand.

ICBA member testifies on regulatory relief

On January 9, ICBA testified before Congress on important regulatory relief legislation. Robert Fisher, president and CEO of Tioga State Bank in Spencer, N.Y., appeared before the House Financial Services Committee’s Subcommittee on Financial Institutions and Consumer Credit. At the hearing, Fisher discussed ICBA-advocated legislation to delay enforcement actions under the HMDA reporting rule and suspend new data-sharing requirements. He also highlighted bills that would exempt more community banks from Consumer Financial Protection Bureau regulations and asked Congress to authorize a short-form call report for highly rated and well-capitalized community banks.

Member Poll

Tax reform

Do you think congressional tax reform will bolster economic growth in your community in 2018?


M&A activity rising

Last year saw 245 bank mergers among U.S. banks, a 2 percent increase from 2016. Here are the year’s final three deals:

  • $600 million-asset Juniata Valley Financial in Mifflintown, Pa., will buy $46.4 million-asset Liverpool Community Bank, also in Pennsylvania, for $12.6 million in cash and stock.
  • Nano Financial Holdings, Inc. in Irvine, Calif., will buy $77 million-asset Commerce Bank of Temecula Valley in Murrieta, Calif., for $23.3 million in cash and stock. This will be Nano’s first acquisition.
  • $123 million-asset Caldwell County Bancshares in Hamilton, Mo., agreed to buy $20.2 million-asset Horizon State Bank in Cameron, Mo., for an undisclosed price.


Fintech: 5 key insights

In July 2017, ICBA surveyed member banks about their
use of fintech now and in the future. Here are a few things we learned.

1. Mobile banking is the primary focus.
When asked to rank seven emerging fintech technologies in order of impact on their community banks’ business strategies, a majority of respondents (54.26 percent) said mobile banking was most influential. On the other end of the scale, no respondents considered blockchain/cryptocurrencies to be the most impactful, and 56.6 percent of respondents considered them the least impactful.

2. Bankers want a fintech provider that will help them attract customers and deliver a superior experience.

When asked which of four factors would most motivate their bank to partner with a fintech provider, 41.6 percent of respondents said they wanted a partner who would attract customers and improve customer experience. The four factors were: attract customers/improve
customers experience; increase fee income; reduce risk and fraud; and improve efficiency/reduce cost.

3. Most bankers have not talked with a fintech provider about potential opportunities.

Among respondents, 56.15 percent have not yet spoken with an outside fintech provider. The majority of respondents (54.69 percent) also have not yet addressed fintech opportunities in their bank’s strategic plan.

4. Some banks have developed or invested in fintech capabilities or solutions in-house.
Among respondents, slightly more than one in 10 (13.28 percent) have developed their own fintech capabilities or solutions. About one in 20 (5.47 percent) have made an equity investment in a fintech company.

5. Spending on fintech is expected to grow.
In 2016, 29.36 percent of respondents reported spending absolutely nothing on fintech. Another 48.62 percent reported spending between 0 and 2 percent of revenue. Fully 16.51 percent reported spending between 2 percent and 5 percent of revenue, and only 5.5 percent reported spending more than 5 percent. In 2017, nearly all respondents (94.74 percent) expected their total fintech spend would be either the same or more than in 2016.