ABA Convention Notebook

ABA officers installed. Albert Kelly Jr., president and CEO of SpiritBank in Bristow, Okla., was elevated to chairman of the American Bankers Association at the organization's annual convention and trade show, conducted Oct. 23-26 in San Antonio, Texas. Other officers elected are:. • Chairman-Elect: Matthew H. Williams, chairman and president, Gothenburg State Bank, Gothenburg, Neb.;. • Vice Chairman: Jeff L. Plagge, president, Northwest Financial Corp., Arnolds Park, Iowa; and. • Treasurer: Stephen G. Crowe, president and CEO, MountainOne Financial Partners, MHC, North Adams, Mass.. Elected to the ABA board of directors was Stanley D. Jenks, president and CEO, Security Savings Bank, Monmouth, Ill. He joins fellow Midwesterners William M. Dana Jr., Central Bank of Kansas City, Mo.; John A. Ikard, FirstBank Holding Company, Lakewood, Colo.; and Craig A. Meader, First National Bank of Kansas, Waverly, Kan. Also named were Curt Everson, South Dakota Bankers Association, as the state association division representative; Gary D. Hemmer, First National Bank of Waterloo, Ill., as chairman of the ABA government relations council; and Barrie G. Christman, Principal Bank, Des Moines, Iowa, as vice chairman of the ABA government relations council. .Roadmap to success. Dave DeFazio of StrategyCorps., Brentwood, Tenn., offered bankers a three-part action plan for succeeding in a "post-Durbin" environment. He advised:. Identify the profitability of every customer household. "Get better at relationship banking," he said. "Half of all checking accounts are not profitable.". Get more fee income from the unprofitable accounts and lock in income from the profitable accounts. DeFazio said that reduced income from debit card transactions will mean that the typical bank needs to generate an additional $8 per month in income from every one of its checking accounts. If new fees are perceived to be fair in terms of value, then customers will pay them, he said. "Clearly-communicated service fees are generally accepted by customers," he said.. Figure out whether you are going to offer free checking. "Many bankers say they are going to need to keep it for now, but figure out ways to reduce costs associated with it," he said.. DeFazio summarized: "Simplify and improve your products, focus on relationship banking and perceived fairness, and re-energize your front-line staff in order to reconnect with customers.". Perspectives on bank stocks. Joshua Siegel, managing principal at StoneCastle Partners, New York, said now is a great time for investors to buy bank stock, particularly in smaller institutions. "The average price of a bank is as low as we've seen in 20 years," he commented. "Now is the time to look at investing in a bank." Siegel participated in a bank investor panel discussion.. He said while more small banks than large banks have failed in the current cycle, he said smaller banks are actually performing much better than the large ones. He said 6 percent of the banks with more than $1 billion in assets have failed, while only 0.9 percent of the banks with fewer than $1 billion in assets have failed.. Laurie Hunsicker, managing director, community banks and thrifts, Stifel Nicolaus, Washington, D.C., said several factors go into a bank rating. "It starts with credit quality," she said. Other factors include the bank's dividend policy, whether it has a stock buyback program (positive) and whether it participated in TARP (negative).. Siegel said that the most important drivers of ratings are management, market performance and balance sheet.. Peyton Green, managing director, Sterne Agee Equity Capital Markets, Birmingham, Ala., said that local investors have lost their appetite for the local bank stock.. Hunsicker said that some banks forecast their earnings for the investor community. She said this adds value to a bank stock, if the forecasts are consistently accurate. If they are wrong, however, "you are toast," she said.. Siegel was optimistic about the prospects for bank stocks. "We are on the back side of the crisis," he said. Looking into the future, he said: "There are 5.5 million small businesses in America. It is the small banks that serve them. Their equipment is getting old. Businesses will need to buy things and they will need financing." .Insight into a booming small business lender. In a breakout session called "Keys to profitability in the small business market," Ken Burgess, shared insights into FirstCapital Bank of Texas, Midland, where he is president and CEO. The $570 million bank has experienced 26 percent average assets growth over the last five years. Loan growth has been 15 percent each of the last four years; $240 million of the bank's $353 million in loans are to small businesses.. "We provide solutions," Burgess said. "If it feels like selling, we are doing something wrong. We build relationships.". Burgess said his team does not approach a prospect with a hard-sell. "We don't lead with products," he said. "We try to assess what they need.". Burgess said the bank's goal is bigger than making loans. "Our goal is to change our customers' lives," he said. .FDIC's advocacy role clarified. FDIC acting chairman Martin Gruenberg was asked how he would balance the FDIC's role as an advocate for the banking industry with its role as a regulator.. "We are policy advocates for a safe and sound financial system, and that financial system exists to effectively meet the credit needs of the United States. It is my view that a safe and sound financial system consists of financial institutions that are carefully managed for the long run," he said. . "I don't view the role as an advocacy one. I view the role as one of carrying out our basic responsibility to insure there are many insured institutions managed in a safe and sound way." .ABA to increase housing support. Kelly announced that Kathy Keating, wife of ABA President/CEO Frank Keating, will be heading up ABA's housing partnership with Habitat for Humanity. ABA volunteers helped to build a home in San Antonio, as it has at previous convention host cities. In the future, ABA hopes to collect a $100 donation from each member bank to put toward the construction of several homes prior to the next annual convention. At next year's convention, slated for San Diego, ABA hopes to be able to announce that its bankers made possible the construction of new homes in a half dozen or so cities across the country. .ABA government relations veteran retiring. Floyd Stoner, ABA's executive vice president for congressional relations and public policy for the American Bankers Association, is retiring at the end of this year. The retirement was announced in July but Stoner got to say goodbye from the general session stage at the convention.. Stoner joined ABA in 1985 after earning his Ph.D. in political science from the University of Wisconsin, teaching at Marquette University and working for the U.S. Congress.. ABA Chief Operating Officer Mike Hunter, who oversees advocacy functions at the ABA, announced that Ken Clayton and James Ballentine will assume operational responsibilities next year for the congressional relations and public policy division with Clayton becoming chief counsel and senior vice president of legislative affairs and Ballentine serving as senior vice president of congressional relations and political affairs. .Election primer. If President Obama wins reelection in 2012, it will be difficult for him to advance a domestic policy agenda because Republicans are likely to retain control of the House of Representatives, said Larry Sabato of the University of Virginia. Redistricting, which is underway across the country, typically re-enforces incumbency, making it unlikely that Democrats will gain the 25 seats or more necessary to take control of the Republican-controlled House. "If President Obama wins, it will be a foreign policy presidency," Sabato said.. Democrats control the Senate, 53-47, but one North Dakota senate seat is expected to be converted to Republican control. That would mean Republicans would need to pick up two more seats to gain a tie, or three seats to gain control of the Senate. Sabato said seats in Wisconsin, Montana, Nebraska and Missouri are toss-ups. Sabato put the odds at 50-50 that Republicans would gain control of the Senate, and he said it is virtually assured that by the 2014 election, Republicans will win control of the Senate.. Sabato described the presidential contest, noting that President Obama will spend about $1 billion on the campaign to Republican's $500 million. He said it will be the most negative campaign ever. President Obama has approval ratings in the low 40s, which typically are regarded as too low to be re-elected. "Something in the economy will have to change for Obama to win," Sabato said. Furthermore, he said President Obama is waiting for Republicans to beat each other up and nominate a bad candidate. Sabato said Republicans are struggling. "When the presidency is available, the Republicans have fielded at JV team, not the varsity," he said.. He said the picture will be clearer by the end of January, after the first four primaries: Iowa Jan. 4; New Hampshire Jan. 10; South Carolina, Jan. 21, and Florida Jan. 31.. Sabato explained that Republicans are generally thought to have 206 electoral votes locked up, while Democrats are generally thought to have 247 locked up. It takes 270 electoral votes to win. He said 85 votes are a toss up; those votes are divided geographically as such: Nevada – 6; Colorado – 9; Iowa – 6; Ohio -18; Virginia – 13; Florida – 29; and New Hampshire – 4.