Bank Capital Crisis! Oct 2008
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Banks must focus on equity retention, \'running the bank\' efficiently and dividend policy
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Bank Capital Crisis! Oct 2008
- 1. BANK CAPITAL CRISIS! Where is the capital for growth? Roger G. Powell Managing Director Phone: 215-665-6687 Janney Montgomery Scott LLC October 2008 North Carolina Bankers Association Management Team Conference
- 4. Capital – A Strategic Resource Required for growth Source: North Carolina Atlas Revisited
- 6. Bank Stock History Source: SNL Financial.
- 7. Bank Stock History January 1973 NASDAQ Bank = 120 July 1980 NASDAQ Bank = 120 Source: SNL Financial.
- 9. 3Q:06 What is Different? 4Q:06 1Q:07 2Q:07 3Q:07 4Q:07 1Q:08 2Q:08 3Q:08 4Q:08 Credit Crisis Recession Accounting Change Liquidity Crisis And global! Government Interventions Source: New York Times.
- 10. … what’s next?
- 11. … what’s next?
- 14. Sources of Bank Capital - Internal 2.92% 5.83% 8.75% 11.67% 14.58% 17.50% 20.42% 23.33% 26.25% 1.75% 2.50% 5.00% 7.50% 10.00% 12.50% 15.00% 17.50% 20.00% 22.50% 1.50% 2.08% 4.17% 6.25% 8.33% 10.42% 12.50% 14.58% 16.67% 18.75% 1.25% 1.67% 3.33% 5.00% 6.67% 8.33% 10.00% 11.67% 13.33% 15.00% 1.00% 1.25% 2.50% 3.75% 5.00% 6.25% 7.50% 8.75% 10.00% 11.25% 0.75% 0.83% 1.67% 2.50% 3.33% 4.17% 5.00% 5.83% 6.67% 7.50% 0.50% 0.42% 0.83% 1.25% 1.67% 2.08% 2.50% 2.92% 3.33% 3.75% 0.25% ROA (%) 90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 11.67% Dividend Payout Ratio (%) Rate of Growth Supported by Equity Retention at 6% Constant Equity/Assets
- 15. Performance of North Carolina Banks Source: SNL Financial.
- 18. Performance of North Carolina Banks Source: SNL Financial.
- 22. Sources of Bank Capital - External Financial Flexibility Cost SUBORDINATED DEBT TRUST PREFERRED SECURITIES Non-Cumulative Perpetual Preferred Common Stock
- 33. Do you want to be a public company? Source: SNL Financial.
- 34. Do you want to be a public company? Source: Chicago Board Options Exchange.
- 36. Keep your current investors: 10 Commandments of Investor Relations
- 38. Sell-side research: tabloid, general market and ‘serious’ Research Analysts NATIONAL BANKERER ABC BANKED BY ALIENS ? Parthenon site of new classical bank. ≠ Parts (x,….∞) for bank earnings !
- 39. Some like it hot
Editor's Notes
- Good Morning! Thank you, Kim, for the opportunity to address an issue that is not only of commercial interest but has helped refine my focus, and that of my colleagues, on broader issues that impact the banking industry. It is always a pleasure to visit in North Carolina, my native state, and the incubator of many of the best practices in today’s banking, and a microcosm illustrating (almost) the full range of issues in the industry today. I hope that the perspective which I bring, of 35 years as an involved observer of banks and banking from the large the small, from the local to the global and from the fully integrated to the mono-line, will be useful to you. I am certain that I will learn from your questions and comments. Some questions I will direct to my colleague, Jason Weber, a Vice President with Janney who is here with me. Let me tell you what I’m going to tell you: Running a bank is hard… and not getting easier; Capital planning is reverting from ‘just-in-time’ to an older and more conservative practice Your best source of capital is from retention – despite your decreased need for investment banking help, and Capital markets will reopen and a new, different ‘normal’ will be obtained..