Briefly Noted

What are the rules that CEOs live by? The following is a compilation of advice brought to you by fellow CEOs and chairmen at Bank Director’s Acquire or Be Acquired Conference Jan. 28-30, 2018, in Phoenix, Arizona. These are snippets from interviews or on-stage panel discussions.

The Most Important Factor in M&A

Robert Sarver, the chairman and CEO of Phoenix-based Western Alliance Bancorp, a $20.3 billion asset bank, had a pretty simple answer to the question of what’s the most important factor to consider in an acquisition. Earnings accretion should be one, two, three, four and five out of five possible answers, he says. If you’re selling your bank and acquiring another company’s stock, wouldn’t you be concerned if there was another factor that was more important than earnings?

Deposits Are More Important Than Loans

David Zalman, the chairman and CEO of Houston-based Prosperity Bancshares, has grown his bank from having just $1.2 billion in assets in 2001 to $22.14 billion in assets today. He has done this through a combination of organic growth and acquisitions, targeting banks in the top five in terms of market share in new geographies. Asset quality and efficiency drive higher profitability, and that’s why the bank values strong core deposits in any potential seller. “The kind [of banks] we look at are not glamorous,” Zalman says. “We believe deposits are probably as important, if not more important than loans.”

Information Sharing Is Critical

Cybersecurity is such an important issue for banks these days, that New Jersey-based ConnectOne Bancorp’s Chairman and Chief Executive Officer Frank Sorrentino is shocked that so many banks haven’t joined or heard of one of several information-sharing and defensive groups, including FS-ISAC or Sheltered Harbor. “These are real-world solutions to what is going on in the cybersecurity space,” he says.

Focusing on Shareholders

To hear the chairman of Home BancShares, Johnny Allison, tell it, the $14.5 billion asset bank in Conway, Arkansas, has become profitable by its relentless focus on shareholders. Allison says that when a CEO who wants to sell his bank to Home BancShares and keep his two country club memberships, his corporate car, and the corporate car his wife has, Allison just tells him: You don’t get it. Home BancShares had a 37.66 percent efficiency ratio for the year 2017. (By the way, the banking company’s net interest margin was 4.47 percent for 2017, and its year-end return on average assets, excluding one-time charges such as hurricane-related expenses and the effect of the tax law in the fourth quarter, was 1.78 percent. In other words: It’s focused on shareholders.)


Naomi Snyder


Editor-in-Chief Naomi Snyder is in charge of the editorial coverage at Bank Director. She oversees the magazine and the editorial team’s efforts on the Bank Director website, newsletter and special projects. She has more than two decades of experience in business journalism and spent 15 years as a newspaper reporter. She has a master’s degree in journalism from the University of Illinois and a bachelor’s degree from the University of Michigan.

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