M&A Strategic Conference: Innovation Grows Community Banks

May 13th, 2017

How should community banks grow? That was an important discussion topic at the Texas Bankers Association 5th Annual Strategic Opportunities Conference in New Orleans, Louisiana, which ran from November 6 to 8, 2016. Are M&A or innovations, the solution? Or, possibly, a combination thereof might be the best growth strategy for 2017.

 

“Add Compatible Innovations”

 

NexBank President John Holt discussed “Reinventing Community Banking: Perspectives on Competing by Innovation” as a panelist of the aforementioned conference. He was a good choice because his bank is a rising star in Dallas. The Dallas Stars can use M&A or innovation to expand their branches, just as NexBank did in December 2015 with its acquisition of College Savings Bank.

 

While NexBank was founded in 1934, College Savings Bank was founded in 1987; thus, College Savings offered a newer, fresher business plan. College Savings Bank was a ‘program manager for the “Indiana CollegeChoice CD 529 Savings Plan” and “Arizona Family College Savings Program–Bank Plan.’ Because the acquisition was rather small, it did not face intense Fed scrutiny.

 

On March 17, 2017, the Fed loosened requirements for mergers and acquisitions – “systemic risk” deals above $100 billion would be fully examined. NexBank had a December 31, 2016 asset total of $4.6 billion.

 

“NexBank Walks the Talk”

 

CEO John Holt was chosen as a panelist at the aforementioned Texas Bankers M&A Strategic Conference because his NexBank has been a great example of organic growth, mixed with M&A. It had already offered mortgage banking, commercial banking, and institutional services. The addition of the student loan component expanded its product mix.

 

With only 4 branches, the Dallas based NexBank has room to grow. It is quite far away from the $100 billion “system risk” “Too Big To Fail” Fed threshold, so it is has plenty of “wiggle room.”

 

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