Tales from Top Performers is a new series under the Street Talk banner that will feature conversations with executives at high-performing banks about their bank and experience in the sector; their view of current issues, and the greatest challenges and opportunities they see ahead. The inaugural episode features a discussion between James Beckwith, CEO of Rancho Cordova, Calif-based Five Star Bancorp, a previous winner of S&P's Global Market Intelligence's annual bank rankings, and...

The banks that failed in the spring of 2023 were outliers that violated some of the golden rules of banking, but many investors continue to unfairly paint the bank group with a broad brush, according to KBW CEO Tom Michaud. In the episode, Michaud discussed the drivers of the large bank failures in 2023 and the idiosyncrasies of those institutions. He further discussed the regulatory response to the liquidity crunch and criticized the Basel III endgame proposal while advocating for deposit...

Regulatory scrutiny has intensified in the aftermath of the liquidity crunch that erupted in 2023 and could play an even larger role in bank M&A activity in 2024 by motivating more banks to consider selling, while also standing in the way of some transactions. The episode features views presented by advisers at Hovde Group, KBW and Luse Gorman at the Acquire or Be Acquired conference, commentary from executives at Community Bank System and Columbia Banking System on the current state of...

U.S. banks’ fourth-quarter 2023 earnings demonstrated continued pressure on funding costs and minimal slippage in credit quality. The Street largely took the results in stride, but management teams were hopeful that net interest margin pressure could subside in the second half of 2024 and credit quality would hold up in the face of a higher for longer rate environment, according to Gerard Cassidy, co-head of global financials research at RBC Capital Markets. In the episode, the veteran...

The word unprecedented became commonplace in banking circles in 2023. The Federal Reserve’s rate hike campaign pushed bank balance sheets deeply underwater, spurred deposit outflows and exposed asset/liability mismatches at some institutions that culminated in record-breaking bank runs that led to the second, third and fourth largest bank failures in US history. Those closures and the liquidity crunch, regulatory response, market selloff and eventual recovery that followed changed the...

Bank stocks have rallied since the Federal Reserve offered hopes of rate cuts in 2024 and there are further catalysts on the horizon, including a pickup in M&A activity, according to Mendon Capital Advisors President Anton Schutz. In the episode, the veteran bank stock investor offered his view of bank stock valuations, credit quality, bond portfolio restructurings and increased M&A activity on the horizon, through both mergers of equals and traditional buyouts.

The negative impact from higher interest rates has led a number of banks to considering balance sheet restructurings and a few institutions have pursued those transactions by unlocking capital through sales of business lines or merging with another company, according to Bill Burgess, co-head of financial services investment banking at Piper Sandler. In the episode, Burgess discussed the current roadblocks to M&A activity, various transactions banks have pursued to facilite transactions,...

As community banks face a challenging operating environment due to higher for longer rates and heightened regulatory scrutiny, Tony Scavuzzo, managing principal at Castle Creek Capital, expects private equity investing in the sector to increase. In the episode, the private equity veteran said he expects new investments to support independent banks looking to play offense and purge underwater bonds or credit risk in their loan portfolios as well as capital being provided to help facilitate...

Many bank boards are stuck as they face investor scrutiny and wait for slippage in credit quality, but experts at Raymond James’ inaugural whole loan conference noted that private equity firms are waiting to infuse capital into institutions so they can play offense in the future. In the episode, John Toohig, head of whole loan trading at Raymond James and host of the firm’s recent conference, discussed the outlook that speakers shared for the economy and the credit quality of mortgages,...

In the latest Street Talk podcast, Davis Polk Partner David Portilla says implementing early remediation triggers outlined in the Dodd-Frank Act would be more effective than the Basel III endgame to avoid repeating the spring 2023 bank failures. In the episode, Portilla made the case for enacting early remediation triggers proposed in section 166 of the Dodd-Frank Act. That provision directed the Fed to adopt regulations for the early remediation of financial weakness. The Fed outlined four...

Banc of California Inc.'s plans to acquire PacWest Bancorp, the largest bank deal thus far of 2023, offers some hope that a rebound in bank M&A could be on the horizon, but advisers acknowledged that the unique nature of the transaction makes it stand apart. In the latest Street Talk podcast, members of the S&P Global Market Intelligence news team highlight discussions with bank deal advisers, including senior members from Janney Montgomery Scott and Troutman Pepper Hamilton Sanders...

Many regional banks’ second-quarter earnings might have fallen short of the Street’s estimates, but results contradicted the bear case that weighed heavily on the institutions’ stock prices during the spring, according to Terry McEvoy, managing director at Stephens. In the episode recorded on July 24, McEvoy, the superregional bank analyst at Stephens, discussed the key takeaways from the first week of regional bank earnings, including what results tell the investment community about banks’...

The liquidity crunch that erupted in March made deposits more precious, but performance has diverged between institutions of different sizes and regions, according to Josh Siegel, chairman and CEO of StoneCastle Partners. In the episode, Siegel discussed the liquidity pressures facing the industry and how they far more acute for regional banks than the nation’s largest and smallest banks; strategies institutions are employing to compete for deposits; potential regulatory changes; the outlook...

While many banks are being unfairly painted with a broad brush, institutions will face tougher regulatory examinations and pressure on probability and that should ultimately lead to a strong rebound in bank M&A activity. Those views were delivered by members of the investment and advisory community during two panel discussions focused on bank liquidity that S&P Global Market Intelligence hosted on May 18. The panels featured Ben Azoff, partner at Luse Gorman; Isaac Boltansky,...

Brad Rinschler, managing partner at Down Range Capital Management, said in the latest "Street Talk" podcast that he believes valuations of many banks are attractive. In the episode, Rinschler and Connor Labozzetta, a partner at Down Range, discussed year-to-date performance of bank stocks, why they think failed institutions were not representative of many banks, the opportunity they see to invest at current levels and their favorite banks to own.

Bearish investors are targeting bank stocks and ignoring the facts, according to Janney Montgomery Scott Director of Research Chris Marinac. In the episode, Marinac discussed the fallout from recent bank failures and the recent, sharp selloff in bank stocks. He said bearish investors are using banks as a “weapon of destruction” to try to force the Federal Reserve’s hand to either cut interest rates, consider a “blanket” deposit insurance alternative for banks or unveil a program that would...

The liquidity crunch that emerged at a few institutions in March sent fears through the market and battered bank stocks but the selloff has left some trophy franchises on sale, according to KBW CEO Tom Michaud. In the latest Street Talk podcast, KBW CEO Tom Michaud discussed the liquidity crunch that emerged in March and battered bank stocks and offered his view on current valuations, bank liquidity levels, potential regulatory changes and M&A activity. 

Economists had hopes that the Federal Reserve could achieve a soft landing as it worked to tame inflation but that prospect could be harder in light of the liquidity crunch facing the U.S. banking industry. In the episode, S&P Global Market Intelligence's news team highlights interviews with investors, analysts and economists say that the Fed remains laser-focused on reducing inflation and the latest jobs report and consumer price index reading provide further support for additional...

Higher rates have put deposits under pressure across the banking industry, but liquidity strains have been far more pronounced at a few banks, resulting in severe hits to their stock prices. Crypto-focused bank Silvergate announced plans to voluntarily wind down its operations after facing a liquidity crunch, but others like SVB Financial raised capital and purged its bond portfolio after seeing a higher cash burn among its clients. In the episode, Todd Baker, a senior fellow at the Richman...

As deposit competition intensifies, banks should consider slowing or even stopping growing to mitigate credit risk and threats to their net interest margins, according to South State Bank Director of Capital Markets Chris Nichols. The episode features a discussion on the pitfalls of competing for deposits just with rates and why banks should rethink their growth goals at this point in the interest rate and credit cycle between Nichols and S&P Global Market Intelligence co-hosts Nathan...

An unforgiving stock market and declining cash reserves at startups should lead to a wave of U.S. fintech industry consolidation in 2023. Some companies will survive, but many others will throw in the towel or sell their operations at a significant discount to their peak valuations, according to Tom Mason, senior research analyst at S&P Global Market Intelligence. In the episode, Mason discussed the outlook for the banking tech space and what changes to the operating model could mean for...

Bank M&A activity fell considerably in 2022 but the push to obtain core deposits should encourage a steady stream of deals in 2023 as funding becomes more precious. In the episode, Bill Burgess, co-head of financial services investment banking at Piper Sandler said he is bullish that roughly 200 transactions could surface in 2023, up nearly 20% from 2022 levels as more and more acquirers seek to bolster their deposit base through M&A, particularly with core deposit premiums at near...

A spike in interest rates has created large amounts of unrealized losses sitting in banks' bond portfolios and sparked liquidity concerns in the investment community, according to Brett Rabatin, director of research at Hovde Group. In the episode, Rabatin discussed the merits of investors' concerns and the impact that deeply underwater bonds have on banks' liquidity, earnings, valuations and potential regulatory constraints on capital returns.

The slowdown in bank dealmaking in 2022 could reverse course in 2023 as institutions gain greater clarity over emerging liquidity and credit pressures and the regulatory environment, according to some of the most active investment bankers and attorneys focused on deals in bankland. The group, which featured the heads of investment banking from Keefe Bruyette & Woods and Piper Sandler and veteran attorneys from Sullivan & Cromwell, delivered that message during a recent webinar hosted...