How Can I Sign New York Banking Presentation

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so this is the case analysis for FB K or FB financial FB k first bank those names are interchangeable so just a little bit of background was founded in 1906 charges farmer State Bank in 1984 Jim Ayres and Steve white acquired it 1988 they officially changed the name to first bank moved the headquarters to Lexington Tennessee and Jim Ayers became the sole shareholder throughout the 90s they focused on expansion in West Tennessee kind of Jackson Humboldt Camden areas and by the mm mm mid-2000s they focused on expansion in Middle Tennessee they purchased the bank Murfreesboro they also decided to move more heavily into Nashville as well as more metropolitan areas such as Knoxville and East Tennessee and Memphis in West Tennessee in 2015 they officially moved their headquarters to Nashville Tennessee and they were listed on the New York Stock Exchange in October of 2016 and 2017 they also announced an acquisition of Clayton Bank and Trust which is headquartered out of Knoxville Southern Strategy is number one first and foremost a bit of Community Bank now what does that mean community banking means to exist for the customer they want to you know basically provide the local community banking experience of while offering the technology of the larger bank so according to the mission of First Bank is to remain true to our heritage as a customer driven bank dedicated to proactively providing first-class financial advice and solutions they want to empower each market with decision-making authority and so basically what that means is they want to provide some what some autonomy to their local managers and basically use that local knowledge to exist for the customer and provide and tailor make financial products and provide financial services for those for that community and so really what the focus is now is to expand in those existing markets so the Porter's five forces the intensity of rivalry in the banking industry it really depends on how you define it so at the national level it's low market concentration there's a large number of firms it's an established industry however when you get to some of these more local community rural communities the concentration can be pretty high I know in the home market of Lexington Tennessee where first bank was originally from you know first think have some 60 70 percent of the deposits but the thing that really drives the intensity of rivalry is kind of what drives the bargaining power of the suppliers and makes them both high and which is low switching cost it's it's fairly low it's fairly low cost to go to change your account from one bank to another and so kind of transitioning into the bargaining power of suppliers or depositors same thing it's low switching costs so the bargaining power is relatively hyper for a depositor it's really not that costly to swap banks as well as there's really little product differentiation as far as to say savings account goes I know the first thing they do offer what's called a First Bank first rewards card and so that offers more than a traditional savings account while at the same time basically operating as a checking account so there is some project of rates for differentiation but it's easy to imitate so the bargaining power of buyers high or this is this will be borrowers so there are multiple competitors there's pretty standardized products and the price competition is high it's easy to go well it's easy to go from one bank to another and say well they offered me this rate and negotiate for a lower rate threat of new entry is low entry costs are high you have to build branches if you have to add personnel know-how knowledge and really the registration and regulatory requirements are pretty onerous to enter the banking industry threat of substitutes are low there's they're no risk-free alternatives out there in the market there are you know money market accounts and things of that nature but for the most part there's nothing that's going to provide 0% risk FDIC insured deposits the lending knowledge and access to funds to be able to provide the knowledge and know-how the sophisticated financial product you know a bank is pretty much the only option so the driving forces what are the driving forces in the banking industry over the next few years so innovation online products and services as well as individual specific products so consumers are demanding more online stuff they don't want to have to go to a branch anything that you can do in a branch they want to be able to do online as well as individual specific products kind of ties in to demographic so we have changing age groups what this means is as as each demographic group comes in so the baby boomers are tired they're going to need different they're going to have different financial needs as the Millennials age they're going to need access to mortgage loans they're going to need access to wealth management advice and as the larger immigrant population comes in as well they're going to have different financial needs so it's going to be key that that a bank is able to adapt and provide tailor-made financial services to a given group economics so we're in about seven years eight years into an economic expansion the laundry done continues the more likely that we're going to see an economic recession and even the growth that we have seen has been lower drugs relative to what we've seen in the past but what this will provide is the mergers and acquisition opportunities so as underperforming bank struggle along they become potential merger targets or acquisition targets another driving force always regulation so the the trend has been toward more regulation right now we have a Republican Congress Republican president but the overall trend post financial crisis has been toward more regulation what does that mean well means more compliance costs we have to have additional HR we have to add additional quality control training and was it also do it can also restrict the products that the products that tonight can offer as well as strategy restrictions we can't act as fast to respond to ongoing events so the key success factors really pretty much tied right up in to the driving forces technology so the going forward banks are going to have to offer top-ranked financial services through mobile apps and online there they're going to have to make branches basically irrelevant for a younger generation along with that though will be cyber security as everything moves online financial information is just like healthy health information is extremely important and so the privacy concerns there are astronomically high so you have to invest in cybersecurity product innovation but we talked about with demographics so changing consumer needs we're going to have to be individually provide individual specific services financial flexibility goes right along with economic growth so we're gonna have to be able to adapt to economic changes so like we said for acquisition or expansion opportunities your financially healthy company you're going to be able to go out there and find an underperforming Bank not necessarily an unprofitable Bank but an underperforming Bank and be able to acquire that Bank and leverage them to the fullest and show them the right way to do it and so lastly right along with the regulation is the legal and compliance training we already talked about so quality control and compliance I know First Bank has ramped up especially in the mortgage lending division quality control and compliance that also means employee training and monitoring regulators are going to want to see that you're actually attempting to show your employees the correct way to behave ethically and to follow their rules and regulations so our SWOT analysis SWOT analysis for FirstBank strength number one what do they do well so the strengths and weaknesses these are internal factors that the bank either does well or does poorly there within bank's control so the strengths is the community banking being able to reach out to the customer to tailor-make financial needs to the individual market that they serve financial performance relative to their benchmark firms first bank especially the industry average outperforms and net interest margin performing loans it's substantially outperforms real market we'll get into that a little bit more in the financial analysis but they're a strong financial performer they have a balanced business model by that I mean they have a very good deposit to loan ratio about 88% so what that means is they lend out 88% of the funds that that they actually take on this deposit so what does that mean it means they're efficiently lending out the deposits that they have while at the same time providing enough buffer in possibly a downturn to provide some capital in their geographic diversification so at the beginning we talked about the background they began it's more of a rural bank in West Tennessee well they've also expanded that rural presence to East and Middle Tennessee so what that does is that provides a stable traditional rural market but also they're in the large metropolitan areas they're dynamic fast growing we're able to there's high loan demand growth especially in Nashville if anybody seeing the cranes there's one everywhere you look so there's it provides a stable base but at the same time as a not dynamic growth opportunity and then mortgage operations mortgage has been as it grown astronomically exponentially over the last five years but they're also very scalable so they are they lend online through the consumer direct like Zillow they also have correspondent where they buy from other banks so what you can do with those is where as a retail presence you have to build a branch and you have actual employees these loan officers don't work for the bank so they can easily just scale those operations back so weaknesses along with the community banking structure it's a decentralized structure so what you have is you have decentralized Authority so that can lead to poor decision making technologies lag behind branch dependency they have 45 branches throughout the state and one in North Alabama so as you move to more online they're going to be stuck with those overhead costs growth in culture as you acquire new companies it's going to be hard to bring those people in and teach them the culture the first Bank way of doing things and that is well mortgage dependency so 46 percent roughly forty percent of the revenue is through the mortgage let's say there is a downturn it is scalable so that we can pull back on our expenses but at the same you're foregoing revenue so opportunities and threats these are things that are in the external environment that the bank can't control but must be aware of so opportunities expansion and acquisition have to go I mean there's always the opportunity in the banking industry to go out and acquire underperforming banks not unprofitable banks but underperforming banks that we feel that we can go out acquire make better and add to the team technology we've been talking about it hitting it over and over again technology there's always opportunity to invest in top-of-the-line financial services online mobile etc new products through the capital markets division especially economic growth so as the economy expands loan growth grows as well as you might see as the cup economy expands the Federal Reserve may raise rates well what happens in that case is the first bank doesn't necessarily have to pass on the higher rates to depositors as fast as they can pass on the higher rates to borrowers so the net interest margin increases and regulatory relief I know we talked about it may be tighter well there's also the opportunity that the Trump administration and Congress could get together and peel back some of the excess regulation that came in after the financial crisis threats an economic recession this would depress loan demand growth as well as rates would go down and we may also see some increased regulation there could be industry consolidation so as the industry consolidates they have large competitors that take advantage of economies of scale and ultimately outperform FirstBank a big bank perception this is a definite problem as the Bank continues to grow and become larger especially as a public company listed on the New York Stock Exchange people that value the community banking experience could come to perceive first Bank as no different than national competitors and then lastly the change in financial intermediation banks could lose out to new peer-to-peer lending services I know that where buyers and sellers of cash find each other so people who need funds will find people who have funds directly via these peer-to-peer lending sites so analysis of financials 2016 3 I earn on assets was 1.35 percent in 2016 versus the industry average of one point zero two percent so outperforming the industry average there as well as return on equity double performance and return on equity almost twenty-one percent versus an industry average of nine percent so as a gross profit margin in the banking industry this is what we call net profit margin so this is the difference between what banks borrow from depositors or from other creditors and what they can lend in their loans and this was four point one percent versus an industry average of three point one percent which is pretty great and then operating profit margin which includes non interest expenses as well as income that was twenty eight percent and then net profit margin was eighteen percent now these are within the within the range of the industry average but another thing that that banks focus on is their efficiency ratio so their efficiency ratio shows every dollar spent for per dollar of revenue and so that industry averages about 60 70 percent so bar spanks still has some room right in line with that operating and net profit margin to improve on their non interest expenses and but this industry this efficiency ratio actually went down 3% so went from 73% to 70% here so they are improving and that is one of the focuses for a bank is their efficiency ratio so list of contingent concerns talked about some of these earlier in the threats economic recession increased regulation industry consolidation big bank perception and changes in foreign financial intermediation all of these are strategic concerns for first bank because these will be the things that could affect the bank going forward so recommendations expanding existing operation expanding existing markets first and foremost expansion through acquisition organic growth as we you want to acquire underperforming banks you want to get a good price for them but you don't do failing banks obviously you want banks that are making a profit and are successful organic growth these metropolitan markets that have new people coming in young people coming in we can capture that but we want to just want to increase market in existing markets where markets that we know how to lend in but for that first Bank knows but to just expand the presence there you want to advertise social media a radio advertisements television advertisements billboards for but just focus on first banks community banking philosophy as well as the ability to offer top-tier financial services information technology we need to either first thing needs to either hire or acquire a top-of-the-line IT firm at a good price at a reasonable price but to design an online website and mobile services and apps that are indistinguishable from a JP Morgan or a Wells Fargo that allow you to do everything online or on your phone that they do I mean and it's easily imitatable because as long as you can develop the software because you know what customers want we go out and you can look at what a big banks doing in addition to that new apps and services like venmo that allow you to pay people via your mobile app as well as acorn acorn traffic acorn allows you to invest money it shows you how much you spend on it on each thing each month so just imitate these things try to find ways to be innovative and imitate as they come along and cybersecurity mean customer financial data is extremely important and I mean that poses a if financial data first bank customers were to be lea ed and this is irreparable reputational risk and finally new capital market department or new capital markets division it would be labeled as FB securities a new standalone division they would be registered as a broker dealer so they could buy and sell securities currently this division just manages interest rate risk for the mortgage division as well as provides interest rate swaps for commercial real estate hedging and commercial loan hedging but as a broker dealer it would add some additional risk profile to the bank but the sheer volume and markup on securities deals the daily volume and the mark-up is just a revenue and profitability opportunity that first thing needs to take advantage of it also helps build a national reputation you are dealing with large institutional investors throughout the country buying and selling securities from these guys and then lastly it would provide third party treasury services to smaller banks a lot of banks outsource their treasury to larger banks and this is gives you a great opportunity to build not only relationships with other banks but access to local market data that otherwise you might not have access to and so lastly questions