Byrd, who received his MBA from the UAB School of Business, told the crowd he foresees the current number of banks across the U.S., currently around 7,500, dropping to 3,000 or 4,000. He says mortgages, home equity loans, auto loans and credit cards, once earnings producers for small banks, are now a national business.
“The large problem for the small banks is they have no place to lend money,” said Byrd. “Historically they have focused on real estate and these banks don’t have the business model if they only do real estate banking and that will be a real problem.”
Byrd is also the Federal Advisory Council representative for the Sixth District of the Federal Reserve. The FAC meets quarterly, and more recently weekly, with Federal Reserve Chairman Ben Bernanke. And he keeps a close eye on what is happening in Europe. He is concerned. Goldman Sachs says Europe’s GDP will weaken through 2012, their Credit Default Swaps are back up to their 2009 peak and the largest banks (like Deutsche Bank, UBS and HSBC) are actually bigger than the country where they live so they cannot be bailed out.
“Europe matters, folks. There is a widening between the 'have' countries and the 'have-not' countries, which is a big problem,” Byrd said. “Some of the have countries are not going to like supporting some of the other countries but they must do it or the European Union is going to fall apart and if that happens you are going to get contagion and see the negative effects come back our way.”
IBERIABANK was the first in the U.S. to pay back Troubled Asset Relief Program money. They have $11.5 billion in assets and will celebrate their 125th year in business in March. They have seen trends and they have seen changes in regulations and so has their leader. And their leader is afraid of neither.
“Historically, good banks – banks that know how to execute – will figure out how to deal with new regulations and trends,” said Byrd. “If we do the right things every day, we don’t have to worry quite as much about the future.”
IBERIABANK moved into the Birmingham market in 2009 with the acquisition of the failed CapitalSouth Bank and has quickly grown its franchise. Their newest branch opened in Mountain Brook in December 2011.
After the Leader to Leader Breakfast, Byrd taught a strategic management class at the School of Business, encouraging students to focus on principle-based leadership. View photos.