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PCBB Banc Investment Daily February 06, 2013
Banc Investment Daily
February 06, 2013


Have you ever wondered why people move around, what they do when they get there and where they are heading next? Have you ever pondered why some lending efforts thrive and others a block away may struggle? Changing trends in technology and demographics or "urbanization" can be a major driver. In fact, according to the Environmental Protection Agency, urbanization is the "concentration of human populations into discrete areas, leading to transformation of land for residential, commercial, industrial and transportation purposes." This topic is important to community banks because according to the NYU Stern Urbanization Project, the 21st century will see more urbanization than in all of human history to date. The group notes that in 2010, with around 3.5B people living in cities, the urban share of the world's population exceeded 50% for the first time. They also estimate that by 2100, as many as 90% will be living in urban areas. While we know that 2100 is a long way off, the trend is away from rural areas and toward urban centers. As bankers, it is important to pay attention to the land shifting around us if we are to ensure a strong financial foundation. At the same time this is occurring, innovation-driven sectors of our economy have become the primary engines of wealth creation. The McKinsey Global Institute explains that large US cities (150,000+ inhabitants) generated almost 85% of GDP in 2010. In the next 15Ys, 259 of the largest cities in the US are expected to generate more than 10% of global GDP growth. The success of our cities and the attraction people have toward them is changing the urban landscape, affecting everything from small business activity to real estate. Large banks use urbanization analysis to key in on the best regions to originate loans and monitor whether sectors are improving or declining. For community bankers, changes related to urbanization will likely shift your business focus, customer retention and acquisition efforts and impact credit quality over time. In many regions office needs are shifting, so bankers could review where companies are moving their teams and concentrate lending efforts in those areas. In other regions, young people are flocking to cities and spending money going out to eat, so business opportunities exist there too. These are just a few cases designed to show how urbanization research can benefit your bank. Understanding how major trends develop, where they are headed and why impacts your opportunities. It can also help you leverage scant resources for long-term performance. We would like to delve deeper into this important topic, but think it would be even better to bring in an expert to help community bankers. That is why we have invited Gregory Tung, a world-renowned urban design and planning guru, to have a discussion on this subject with attendees of our 2013 Executive Management Conference (April 7 to 10) in San Francisco. The topic of urbanization and shifting human behavior is interesting and its impact is far reaching. In the US, urbanization picked up speed at the turn of the last century and since then, the percentage of people living in urban areas has climbed from 39% to 73%, according to the Census Bureau. We cannot wait to hear more as we dig deeper into its specific impact on the business of community banking - we invite you to attend the conference. To register, go to