Bank M&A activity has picked up as institutions face revenue pressures and increasing customer demands to improve technology offerings, and more institutions could pursue to sales as they see some of their strong peers decide to partner with other institutions. In the episode, Collyn Gilbert, director of strategy at Valley National Bancorp, discussed M&A activity, balancing branches against digital channels, competition from neobanks and operating with dual markets in the Northeast and Florida. For more discussion on bank M&A, join us Sept. 8 to hear the changing drivers and considerations for successful deals in the industry post-pandemic, featuring leading advisors who have been active dealmakers in the last few years. Click here to register for the webinar.

Street Talk

Ep. 82 - Pickup in bank M&A could have domino effect

In the episode, Banc of California President and CEO Jared Wolff discussed his outlook for community bank M&A, the health of small business borrowers and their appetite for expansion, and the state of the economic recovery and the potential impact from the emergence of the COVID Delta variant. Wolff also discussed Banc of California's multi-year turnaround that has transformed the company's balance sheet composition, capital structure and management team.

Ep. 81 - Amid strong recovery, Banc of California hearing more M&A chatter

Citizens Financial Group Inc. sees stronger organic growth opportunities than peers, the company remains on the pursuit for acquisitions after announcing plans to acquire the East Coast branches and national online deposit business of HSBC Bank USA NA. In the latest Street Talk podcast, Citizens Financial Chairman and CEO Bruce Van Saun discussed the HSBC deal, the company’s appetite for future acquisitions, balancing physical branches against digital offerings and the outlook for credit quality and loan growth.

Ep. 80 - Citizens Financial CEO discusses deal appetite, outlook for credit quality, loan growth

As bank M&A continues to heat up, investors could increasingly receive nice pops on their stakes in institutions selling for notable market premiums. In the episode, Anton Schutz, president and CIO Mendon Capital, discussed what has driven bank stock valuations and recent bank deals as well as his outlook for future bank stock performance and M&A activity, including mergers of equals, or MOEs. 

Ep. 79 - More attractive premiums for bank M&A targets coming

Revenue pressures from excess liquidity could create opportunities for community banks to take market share while competitors retreat. In the episode, Jeff Marsico, president at bank advisory firm Kafafian Group, and Jeff Weaver, president and CEO at Dallas-based American Bank suggested that banks should take a contrarian view to the challenging revenue environment and build core deposits, lend to industries most heavily impacted by the pandemic and invest in technology to remain relevant.

Ep. 78 - The case to grow deposits when the world is flush with cash

In the episode, Jeff Davis, managing director at Mercer Capital, said the real risk facing the U.S. banking sector is that interest rates do not increase materially from current levels and that excess liquidity remains on balance sheets longer than many expect. Banks' traditional revenue streams have also come under pressure at a time when digital adoption has accelerated considerably due to the pandemic. Davis believes banks have little maneuvering room and expect more institutions to look to M&A to cut costs associated with branches to offset revenue headwinds.

Ep. 77 - Excess liquidity, low rates leave banks between a rock and M&A

M&A and fundraising activity in the fintech sector has started a torrid pace in 2021 and shows no signs of slowing. In the episode, Greg Smith, managing director at fintech-focused investment bank FT Partners, discussed recent M&A and fundraising trends in the fintech sector and activity from special purpose acquisition companies in the space. He also offered his view of fintech valuations, which subsectors have garnered the most interest and his outlook for dealmaking activity, including between banks and fintechs.

Ep. 76 - Record pace of fintech M&A, funding in Q1'21 has legs

Banks should not fall victim to focusing on short-term results and should instead work to deliver long-term shareholder value, particularly in a world increasingly focused on ESG, according to a veteran of the investment community. In the episode, Fred Cannon, the former director of research and head of equity strategy at KBW, who will soon join the FASB, shares his views on bank stocks, how bankers should talk to investors and the threat from fintech.  

Ep. 75 - As ESG gains currency, banks need long-term focus

Bank stocks have surged in recent months as the outlook for credit quality and the broader economy has improved but community bank valuations might have even further room to run, according to GenOpp Capital Management CIO Joe Fenech. In the episode, Fenech discusses his outlook for bank credit quality and why he expects performance to continue to exceed previous expectations. He also highlighted other tailwinds for bank stocks, including the beginning of a M&A wave, which he expects to kick off this year. 

Ep. 74 - Seeing legs in strong credit performance, US bank stock rally

Banks will face greater regulatory scrutiny under the Biden administration but could also see the playing field leveled some with their nonbank counterparts. In the episode, Isaac Boltansky, director of policy research at Compass Point Research & Trading, discusses financial regulation under the Biden administration, what the new, key agency heads – Treasury, CFPB and OCC – will focus on in their early days on the job and how the positive change in banks' standing in Washington D.C. could allow them to lobby for regulation of nonbanks, fintechs and possibly even big tech's encroachment into finance. 

Ep. 73 - Banks could see more regulation but playing field leveled with nonbanks

The current environment is highlighting the value of scale and should encourage more bank M&A activity, including larger transactions, according to KBW CEO Tom Michaud. In the episode, Michaud, whose firm just advised TCF on its $6 billion merger with Huntington, said that more institutions are looking to gain scale to invest in digital channels, become more efficient and close branches and effectively compete with the megabanks. The executive also discussed what has driven banks stock recently and argued that valuations will be higher a year from now. 

Ep. 72 - KBW CEO says desire to compete with megabanks driving more US regional bank M&A

Banks' credit quality remained quite strong through the third quarter but industries more exposed to the COVID-19 pandemic, like the hospitality sector, have caused a headache for many institutions and performance is unlikely to rebound soon. The episode features third-quarter earnings commentary from banks like F.N.B. Corp and Synovus as well as the outlook for the lodging sector, including when it is expected to recover from the COVID-19 led downturn, provided by members of the S&P Global Ratings team.

Ep. 71 - Hotel sector faces tough sledding until full COVID-19 solution

As deposits have flooded into the system and loan growth has been hard to come by, many banks find themselves drenched with excess liquidity. The dynamic has put considerable pressure on net interest margins but might not prove short-term in nature like many banks hope, according to Greg Hertrich, head of U.S. depository strategies at Nomura Securities. In the episode, Hertrich said those earnings pressures could remain in place for many banks, prompting them to consolidate branches, particularly in light of increased digital adoption, and to pursue M&A activity.

Ep. 70 - Banks' liquidity conundrum could fuel M&A activity

Deposits have flooded into the banking system, leaving institutions sodden with excess liquidity and few attractive options to put the cash to work. In the episode, Scott Hildenbrand, head of balance sheet analysis and strategy in the financial services group at Piper Sandler, discussed the unprecedented inflow of deposits and how to measure whether the funds are short term in nature. He also talked about how banks should approach investing in the current low rate environment and what opportunities to consider.

Ep. 69 - Banks left with pockets full of cash and few places to go

While many investors have soured on bank stocks, Johnny Guerry, former managing partner and portfolio manager at Clover Partners, and Brad Rinschler, former director of institutional equities at Boenning & Scattergood, are launching a new fund to capitalize on the group's underperformance. In the episode, Guerry and Rinschler talk about the strategy for the new fund – Down Range Capital Management – and the investment opportunity they see as superior to the one that was available at the bottom of the Great Recession. They also discussed what they think the market is missing, why they have comfort over bank balance sheets and the eventual boost some bank stocks could receive when M&A activity resumes. 

Ep. 68 – As many investors zig away from bank stocks, 2 vets in the space zag toward them

S&P Global Market Intelligence principal analyst Nathan Stovall takes a deep dive into issues facing financial institutions and the investment community. Tune in for interviews with industry insiders as well as brief outlooks for the banking sector.

hubhopper

Street Talk

hubhopper