Street Talk

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 banke...

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 o...

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...

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 effect...

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...

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...

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 talk...

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...

While a number of financial-focused funds have faced considerable pressure this year, some investors see opportunity amid the volatility. Andrew Wessel, former portfolio manager at Sterling Capital Management, is in that camp and is launching a new long/short financial sector focused fund called Exegis Capital. His partner in the fund, Mick Mulvaney, has a well-known career in Washington D.C., hav...

Community banks have tapped that debt markets at torrid place in recent months, building capital levels for insurance and flexibility to take advantage of opportunities that could arise amid economic fallout from COVID-19, according to two members of Performance Trust Capital Partners. In the episode, Daryle DiLascia, partner and head of investment banking at Performance Trust, and Brian Leibfried...

Bankers have expressed optimism about loan deferral trends but some members of the Street remain concerned about the unprecedented levels of forbearance and the potential loss content sitting on U.S. bank balance sheets. The episode features commentary from executives at JPMorgan, BancorpSouth Bank, Hancock Whitney, Signature Bank, Synovus Financial, Western Alliance Bancorp and U.S. Bancorp, resp...

The coronavirus pandemic has pushed digital adoption five years into the future, prompted banks to invest more in technology and could set the stage for fintech and bank mergers later this year. In the episode, Todd Baker, senior fellow at Columbia University and managing principal of Broadmoor Consulting; Phil Goldfeder, senior vice president of public affairs at Cross River Bank; and Greg Smith,...

Bank M&A activity has nearly come to a screeching halt and deal announcements are unlikely to pick up soon. Still, Rick Childs, partner in advisory services group at Crowe LLP, said in the episode that a number of would-be cash buyers are engaging in deal talks but have agreed to longer exclusivity periods with targets given the uncertainty over the economy, asset quality and capital levels at bot...

Banks with exposure to the oil and gas sector have seen their stocks underperform the bank index as oil prices have plunged this year, raising the specter of increased defaults. That sector is unlikely to see relief any time soon. In the episode, Tom Watters, managing director and sector lead oil & gas at S&P Global Ratings, discussed the outlook for oil prices, how this downcycle compares to prio...

The Street remains concerned that banks could have a hole in their balance sheets but even if dire outlooks are realized, the industry's capital levels should remain quite strong. In the episode, members of the investment community discuss current bank stock valuations, the Street's view of future credit losses and capital levels and the market's positive reaction to large reserve builds in the fi...

The U.S. government and bank regulators have responded swiftly to the economic fallout from the coronavirus with unprecedented stimulus packages, including $349 billion for small businesses through the Paycheck Protection Program, or PPP. The program has offered a lifeline to banks' small business borrowers and attractive fees to some lenders but a group of bankers and advisers cautioned during ou...

The U.S. government responded to the potential economic fallout from the coronavirus with a historic $2 trillion stimulus package, with nearly $350 billion focused on small businesses through the Paycheck Protection Program, or PPP. While the PPP kicked off with a rocky start, Isaac Boltansky, policy analyst at Compass Point, believes the Federal Reserve and U.S. Congress are committed to making i...

Bank stocks have been punished as interest rates have plunged and the outlook for economic growth has soured due to fears over the coronavirus, but the selloff could be overdone, according to RBC Capital Market's Gerard Cassidy. In the episode, Cassidy, head of U.S. bank equity strategy at RBC Capital Markets, discussed what has driven the roughly 40% decline in bank stocks over the last month, wh...

A number of regional banks have pushed for scale to invest in digital channels but some even smaller players have enlisted fintech firms to build platforms on their own. In the episode, Dale Oberkfell, president and CFO of Midwest BankCentre, a St. Louis-based bank with $2 billion in assets, discusses how his institution utilized software from MANTL to build a digital bank that attracted more than...

South State and CenterState are joining forces in another merger-of-equals driven by the desire to invest in technology, but the deal stands out as both institutions felt the need to partner despite operating on strong footing. In the episode, we we spoke with S&P Global Market Intelligence colleague Zach Fox, who spoke with key advisers about the drivers of the deal. The episode also features com...

In the episode, Anton Schutz, senior portfolio manager at Mendon Capital, offers his outlook for bank stocks in 2020 as well as bank M&A activity. The longtime bank investor said banks enjoyed a relief rally late in 2019 after being "oversold, underowned and hated" and the prospect of further increases in long-term rates and improvements in efficiencies will drive the group in 2020. Schutz also be...

Traditional banks face increasing competition from digital-only players, leading to further pressure on net interest margins. In the episode, Sandler O'Neill's co-head of investment banking and executives from First Horizon and South State Bank discuss the growth of digital-only deposit platforms, how have they kept banks from decreasing deposit costs despite Fed rate cuts and the investments that...

The importance of scale has been a driver of larger bank deals announced in 2019 but longtime analyst Nancy Bush is skeptical of the argument. In the episode, the veteran bank analyst, who will retire at year-end, discussed recent large bank M&A, the future of equity research, including the prospect of other analysts opening independent firms like her own, and whether she believes bankers truly ha...

The current interest rate environment creates challenges for virtually all U.S. banks but some institutions, like Signature Bank in Rosemont, Ill., are still producing outsized returns. In the episode, Signature President and CEO Mick O'Rourke discusses how his bank has outperformed most banks, built prized noninterest-bearing deposits through superior service and technology and what changes he se...

Financial institutions will move away from Libor, a reference rate that tracks nearly $400 trillion in financial contracts, in just a few years and Goldman Sachs still sees the group adopting the Secured Overnight Financing Rate, or SOFR, despite the recent volatility in the relatively new benchmark. In the episode, Goldman's head of Libor transition, Jason Granet, discusses how prepared the banki...