Street Talk | S&P Global Market Intelligence: Recent Episodes
Nathan Stovall
S&P Global Market Intelligence senior research 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.
KBW CEO Tom Michaud discussed the disconnect between banks' fundamentals and investor caution toward the group. He also believes large bank M&A activity will pick up even though the Street reacted negatively to a handful of big-ticket deals.
Joe Fenech, head of equity research at Hovde Group, discussed current bank stock valuations, the growing importance of deposits in valuing franchises and the market's increased skepticism toward M&A, including transactions that appear favorable for the buyer.
Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau, has changed the way the agency operates and reduced enforcement actions against banks. Now, Mulvaney is turning his attention to a powerful tool used by the agency called the civil investigative demand. S&P Global Market Intelligence colleague Brian Cheung discusses how the CFPB uses the tool and what changes could mean for banks and consumers.
CD specials are back. More banks are offering the promotional rates on CDs, or certificates of deposits, to attract new customers. While that is good news for savers, it means funding costs likely will rise even more for banks. The episode shines a light on recent CD rates offered by banks and features commentary on smart deposit strategies from Bruce Hinkle of StoneCastle Cash Management and KeyCorp CFO Donald Kimble.
De novo banks, or newly formed institutions, were all the rage before the credit crisis but virtually dried up in the years after the Great Recession. The tide is finally beginning to turn, with investors seeking to open banks across the country. Randy Dennis, president of DD&F Consulting, who has helped charter close to 100 banks in his career, discusses the new class of de novos and believes there will be considerably more activity.
More banks are reaching further out the yield curve in their loan portfolios to meet customer demands but, increasingly, advisers believe institutions need to proceed with caution. In the episode, experts from PIMCO, Sandler O’Neill, Chatham Financial and PrecisionLender discuss rate risk and how banks focused on funding will ultimately prove the winners.
Blockchain has been touted as a revolutionary technology that change will financial services forever. But, so far, despite millions invested in research and development by incumbents, fewer use cases have emerged than some had expected. Tom Mason, fintech research analyst at S&P Global Market Intelligence, explains how blockchain technology works and discusses its practical applications in financial services, while dispelling the notion that it will displace large institutions.
Deposits have become far more important to banks over the last year, particularly acquirers looking to bolster their funding bases. Given the change, Piper Jaffray analysts Matthew Clark and Will Curtiss say bank investors might find the greatest upside putting their cash behind would-be sellers with strong deposit franchises.
A new accounting provision changing the way U.S. banks reserve for loan losses will reduce the industry's capital by more than 10% and lead to greater volatility in earnings but might leave institutions better prepared for a downturn. Banks won't take the change in stride and are expected to respond by raising loan prices and slowing growth. Two colleagues from S&P Global Market Intelligence – Chris Vanderpool, a co-author of our bank projections, and Kiah Haslett, who reports on accounting issues – discuss the impact on the industry.
Banks across the U.S. continue to shrink their branch networks but one community bank, Citizens Bank of Edmond, has gone a step further and replaced physical locations with innovative strategies, including the creation of a street festival and a coworking space for customers. Jill Castilla, the bank's CEO, discussed the transformation and how it has paid dividends.
While tax reform will offer big boost to bank earnings, some bankers, including the CEOs of JPMorgan and Capital One, expect the windfall of profits to lead to increased competition. Fiercer competition could benefit consumers since they would receive lower prices on loans and higher rates on deposits but it would mean lower margins for banks, whose stocks have rallied on the prospect of higher profits.y newest episode and discover more fascinating content from my channel!
A new accounting standard that changes that way banks reserve for loan losses might not sound that earth-shattering but it could lead to a capital shortfall as large as $70 billion across the banking industry. Josh Siegel, CEO of StoneCastle Partners, an investor and adviser to community banks, and Ethan Heisler, president of the Bank Treasury Newsletter, discuss the impact of new standard, dubbed the current expected credit loss model, or CECL.
We spoke with Rick Childs, partner at Crowe Horwath LLP, about tax reform's impact on bank M&A activity. While tax reform has caused bank stocks to rise and could make a number of deals easier to ink, a lower tax rate will make one aspect of bank acquisitions more expensive.
In the episode, we offer our updated and more bearish outlook for community banks. While community bank earnings are still poised to grow higher, largely due to a boost from tax reform, hopes for considerable margin expansion have been dashed.
We spoke with PL Capital's Rich Lashley, longtime bank investor and shareholder activist, about his view of U.S. banks and how the increase in valuations has left fewer investment opportunities. He also offered his outlook for M&A activity and fundamentals, including the prospect of rising deposit costs that will likely separate the true "haves and have nots."
We spoke with the co-heads of Stephens' financial institutions practice about the resurgence in bank IPO activity, what investors are looking for in new issuances, the current IPO pipeline and the success Stephens has enjoyed since ramping up its depository practice.
We spoke with Jeff Davis, managing director of Mercer Capital's financial institutions group, about banks' third-quarter earnings season, what results say about the current stage of the credit cycle, stock valuations and the prospect of higher deposit costs and future loan growth.
In the latest episode, we discussed the highlights of the Big Decisions in Banking Conference with S&P Global Market Intelligence colleagues Brian Cheung and Eric Turner. The conference covered the future of bank M&A, regulation and the current stage of the credit cycle as well as the crossover between fintech and traditional banking.
In mid-April 2017, we spoke with veteran bank analyst Nancy Bush about the change in investor sentiment toward the bank group over the last five months.
We spoke with Isaac Boltansky, director of policy research at Washington, D.C.-based Compass Point Research and Trading, on April 28 about the likelihood of proposed reforms seeing the light of day in their current form.
We spoke with bank investor Anton Schutz about the market's response to recent bank deals and his outlook for M&A activity, including the possibility for more big-ticket deals.
We spoke with veteran analyst Gerard Cassidy about recent rate hikes, the upcoming stress tests and how new bank-regulatory heads could clear the way for big bank mergers.
We spoke with fintech research analyst Eric Turner about the impact blockchain will have on banks and financial services as well as the practical uses and potential cost of ignoring the technology.
We spoke with Jones Day Partner Chip MacDonald about the potential for regulatory reform and what certain carve-outs could mean for the smaller institutions, including de novo banks.
We asked three members of S&P Global Market Intelligence team – Bill Holland, Tim Zawacki and Zach Fox – how Hurricane Harvey will impact the energy, insurance and banking sectors.
Listen to my newWe spoke with KBW President and CEO Tom Michaud about his outlook for bank stocks, what issues are of most importance to investors and how deposits are coming back in focus in bank M&A activity.est episode and discover more fascinating content from my channel!
We spoke with Sandler O'Neill Chief Balance Sheet Strategist Scott Hildenbrand about the growing importance of deposits in bank M&A and what actions banks have taken to prepare their funding bases for rising rates.
We spoke with Raymond James Managing Director Michael Rose about banks' exposure to the retail sector and whether investors' concerns over the issue are warranted.