Friday, January 27, 2017

Don’t bank on it!

I don’t often veer into writing about other industries, especially those where my knowledge is largely superficial. But I came across a fascinating slideshow from Forbes magazine, which ranked the 100 best and worst banks in the U.S.

The survey was based on a total of 10 metrics including growth, profitability, capital adequacy and asset quality among others. Now anyone who follows the banking sector closely knows that the frequency of M&A in that vertical either rivals or, often surpasses that of the accounting profession.

But first, a bit of personal history with banks and M&A.

Since my wife and I were married, our checking and savings accounts have been transferred on five separate occasions. No, not because we moved our assets due to poor service – although that would have applied to more than one banking brand - but rather that our current banks were acquired by larger institutions – the last being Fleet Bank which was absorbed a number of years ago by Bank of America.

Another reason I found this survey interesting is that for the past several years and arguably longer, banks have very quietly begun establishing themselves as direct competitors to CPA firms – offering everything from 1040 preparation to financial planning and small business advisory services. In fact, my local branch of BOA advertises such services right in their front window.

So not only are CPA practices going head to head in their own verticals, but also against banking behemoths with far more resources and reserves than they could ever hope to have.

For example, Bank of America’s earnings alone in 2016 were more than the system-wide U.S. revenues for Deloitte – the largest audit firm in the world.

But onward to the rankings.

Those banks rated as the top 10 in the country are in order: Pacific Western, Citizens Business Bank, Community Bank System, Western Alliance, Glacier Bancorp, First Republic, Bank of Hawaii, Home Bancshares, Prosperity Bank, and Florida Community Bank.

As my luck would have it not one of those listed above has a branch within 500 miles of my home. As opposed to those trawling on the bottom – four of which are in my market area: Huntington Bancshares, Key Corp, SunTrust, Valley National Bank, Comerica Bank, First Horizon, Bank of America, EverBank, Hancock Holding Company, and Associated Banc-Corp.

Unless BOA gets absorbed, I guess I’m stuck there for a while. But I guarantee they’ll never get the opportunity to prepare my taxes.

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