Street Talk

Bank advisers and market participants at S&P Global Market Intelligence's annual community bankers said bank M&A and IPO activity is in a holding pattern and will pick up once there is greater clarity over the macroeconomic and interest rate environment. They also suggested that banks avoid trying to position their balance sheets for particular rate moves and instead prepare for a variety of scenarios. The episode highlights balance sheet strategies, the current regulatory environment and the outlook for bank deal activity from experts at Piper Sandler, Darling Consulting, Alston & Bird, Stephens, KSK Investors and Hovde Group.

The emergence of tariffs led to a broad selloff of US banks amid fears of slower economic growth or even a possible recession. Banks' first-quarter earnings season showed strong performance before the onset of tariffs, but ultimately might have left investors with more questions than answers. In the episode, senior reporter Harry Terris shared the key takeaways from large banks' first-quarter results and highlighted commentary from JPMorgan, Bank of America, Capital One, First Citizens and others. The results show a noticeable divide between "hard" data, such as consumer spending strength, and "soft" data, like stock market volatility and economic forecasts. Despite the uncertainties, major banks have largely maintained their financial guidance. However, they have adjusted loan growth expectations downward due to a more cautious approach from clients, reflecting a "wait and see" attitude amid the current economic climate. Bank news lead Lauren Seay further discussed how tariffs are expected to negatively impact M&A activity, but also notes that the trade policies have not completely stymied bank deals, with large transactions like Columbia Bank's plans to purchase Pacific Premier surfacing since tariffs were announced.

Each year, S&P Global Market Intelligence ranks top-performing financial institutions in the following categories: community banks $3 billion to $10 billion in assets, community banks with less than $3 billion in assets, credit unions will more than $100 million in assets, and the top largest U.S. public banks by total assets. In another installment of Tales from Top Performers, executives from two winners of the community bank rankings – Nicolet Bankshares CFO Phil Moore and Northeast Community Bank Chairman and CEO Ken Martinek – share what differentiates their franchises and how they have outperformed peers. They also discussed the greatest challenges and opportunities they see over the next 12 months, both organically and through M&A activity.

Activist investor John Palmer sees plenty of catalysts for bank stocks, including stronger fundamentals, attractive valuations and a resurgence in M&A activity among regional and community banks. In the episode, Palmer, principal and managing member at PL Capital, discussed his firm's investment approach, its successful history in running proxy campaigns and how its interactions with bank management teams have changed over time. The veteran investor also shared how PL Capital has encouraged change and offered value to management teams as well as his view on the need for scale at some banks, M&A activity, regulation and bank valuations.

The bank advisory community is optimistic that bank M&A activity will rebound in 2025 and they should be, according to Mercer Capital Managing Director Jeff Davis. In the episode, Davis discussed his takeaways from the annual Acquire or Be Acquired Conference, where scores of advisers shared their viewed for M&A activity to be materially stronger this year. Davis also discussed the improving fundamental environment for banks, the outlook for bank valuations and whether institutions should take advantage of the current optionality in the marketplace and pursue capital raises or acquisitions while the window remains open.

Investors have flocked back to the bank group over the last five months as the fundamental environment has improved and the election results in November added legs to the rally, according to KBW CEO Tom Michaud. In the episode, Michaud discussed improving investor sentiment toward the U.S. bank space, his firm's expectation for banks' earnings and credit quality in 2025 and 2026, and the outlook for capital raising and bank M&A activity.

The bank M&A pipeline has improved significantly over the past month, and capital is available for institutions looking to grow amid the surge in investor interest in the banking sector, according to Bill Burgess, co-head of financial services investment banking at Piper Sandler. In the episode, Burgess said there are six factors contributing to renewed interest in bank deals, particularly following the recent U.S. elections. He noted that there is pent-up demand for deals after years of stagnation, a rally in bank stock prices has improved seller psychology, and interest rate marks have become more manageable for buyers. He anticipates a shorter regulatory approval process for bank deals and believes larger buyers could return to the M&A arena after getting more clarity on the post-election regulatory framework. Burgess also said capital is abundant for event-driven and growth stories but cautioned against an overly aggressive push for capital issuance driven by rising share prices.

The U.S. election could change the legislative, supervisory and regulatory framework for the banking industry. In the episode, we discuss what different election outcomes could mean for banks with three guests focused on policy, regulation and rulemaking: Paul Merski, executive vice president, congressional relations and strategy at the Independent Community Bankers of America; Naomi Camper, chief policy officer at the American Bankers Association; and Isaac Boltansky, managing director and director of policy research at BTIG. The group outlined the current regulatory framework under the Biden administration and how it has differed from the Trump administration. The panelists agreed that a Harris presidency could be seen as a continuation of the existing regulatory framework and noted that a Trump victory could lead to significant regulatory shifts, particularly around consumer issues, fintech and bank M&A activity. But, they also noted that both candidates have shared populist views, creating a horseshoe effect of the ideological specturm.

The operating environment remains challenging for many banks but experts at Raymond James' annual whole loan conference in September 2024 noted there is a growing acceptance and willingness to pursue deals to counter headwinds facing the group. In the episode, three veterans at Raymond James – John Toohig, head of whole loan trading; Bill Sammon, head of financial services capital markets; and Bob Toma, managing director in financial services investment banking – discussed the outlook for bank earnings, the heath of the consumer, the threat from institutions' exposure to commercial real estate and the impact of lower rates on future performance. The group also discussed how the fundamental environment will impact sentiment among investors and bank boards, the recent rebound in M&A and capital raising activity, and the potential for more deals, including securitizations that help banks derisk their balance sheets.   

Rate hikes by the Federal Reserve and changes in post-pandemic behavior have put pressure on commercial real estate (CRE) borrowers needing to refinance loans coming due. The tally is nothing to sneeze at, with approximately $950 billion in CRE mortgages set to mature in 2024, according to S&P Global Market Intelligence's analysis of nationwide property records. In the episode, S&P Global Market Intelligence analysts Tom Mason, Chris Hudgins and Zain Tariq discuss the threat of maturing CRE mortgages and what portion of those loans are in the troubled office sector. The trio also outlined differences in valuations across different CRE categories, the potential read through provided by the publicly traded REIT sector, and how banks are managing their CRE exposures and reacting to regulatory and investor scrutiny into the asset class. 

Bank stocks and regional bank stocks in particular have rallied over the last month and there is further room to run, according to Joe Fenech, Chief Investment Officer at Gen Opp Capital Management. In the episode, Fenech said that sentiment towards bank stocks is improving and that the long bear market in bank stocks ended in May 2023. The investor argued that the recapitalization of New York Community Bancorp earlier in 2024 could serve as the turning point of this investment cycle now that “smart money” has rescued one of the sector's biggest problems. He also sees net interest margin pressure easing and eventually becoming a tailwind for banks and argued that not all commercial real estate (CRE) loans should be seen as high risk and resulting in sizable losses. He also believes M&A activity will increase, driven by succession issues and the need for scale and technology investment.

Tales from Top Performers features conversations with executives at high-performing banks about their view of current issues, and the greatest challenges and opportunities they see ahead. This episode features executives from three of the highest performing banks in the country: Curtis Griffith, chairman and CEO of Lubbock, Texas-based South Plains Financial; Paul Egge, CFO of Houston-based Stellar Bancorp; and Skip Hageboeck, CEO of Charleston, W. Va.-based City Holding Co. The bankers outlined how they've been able to maintain strong deposit franchises in the face of fierce competition, their outlook for loan growth and credit quality, and the greatest challenges and opportunities they see over the next year.  

Deposits and liquidity remain at the forefront for most bankers and the intense competition for core funding will eventually lead to a resurgence in M&A activity. That was the message delivered by a variety of presenters at S&P Global Market Intelligence's annual community bankers conference on May 20 and 21, but they acknowledged that transactions face some challenges in the near term, including lower valuations, fewer would-be buyers and regulatory pressures that tend to require more capital in deals. The episode features commentary from banking experts at Ampersand, Curinos, StoneCastle Partners, Performance Trust Capital Partners, Fenimore Kay Harrison, Stephens, Janney Montgomery Scott, Piper Sandler and Klaros Capital.

The investment community has expressed great concern over commercial real estate and questioned whether a severe downturn could lie on the horizon, but Rich Hill, head of real estate strategy and research at Cohen & Steers, is not in the camp. In the episode, Hill discussed the misconceptions about commercial real estate, the considerable differences in risk across varies subcategories and how publicly traded REITs serve as a leading indicator to the private markets. The veteran of the real estate space further argued that the current cycle is very different than the global financial crisis and could represent the greatest opportunity to invest new capital in a generation.

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 S&P co-hosts Nathan Stovall, director of financial institutions research, and Jimmy Pittenger, who oversees the firm's US financial institutions commercial team. In the episode, Beckwith discusses how he got into banking, what he loves about the industry, how his institution has built an attractive deposit franchise and managed elevated exposure to commercial real estate, and his view on the greatest challenges and opportunities ahead. 

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 insurance reform. The executive also noted that investors continue to treat all banks the same and express concern over their commercial real estate exposures but noted that most of the industry faces an earnings issue rather than a threat to safety and soundness.

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 episodes features views presented by advisers at Hovde Group, KBW and Luse Gorman at the Acquire of Be Acquired conference, commentary from executives at Community Bank System and Columbia Banking System on the current state of bank M&A, and some discussion of the unfolding situation at the New York Community Bancorp.

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 analyst said he shares that optimistic outlook and believes the current environment is more similar to 1995 when the U.S. economy digested sharp rate hikes by the Federal Reserve and likely will not result in a severe downturn like some investors fear. Cassidy believes bank stocks are a show me story but does see further catalysts on the horizon. The analyst also offered his outlook for bank M&A activity.

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 competitive landscape and the way bank observers view the industry. This episode features commentary from experts at BTIG, Davis Polk, Janney Montgomery Scott, KBW, Luse Gorman, Piper Sandler and others on the lessons learned from the liquidity crunch, the fallout afterward and the potential opportunities that lie ahead. 

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, the prospect of further deals on the horizon and the potential for increased private equity investing in the bank space.  

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 bank M&A activity.

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, credit cards and commercial real estate. Toohig also shared how depositories and their boards are reacting to the higher for longer rate environment, the current gap between buyers and sellers in the secondary loan market, and investor appetite to support bank M&A and loss trades in institutions' bond and loan portfolios. 

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 different levels under an early remediation framework, but never implemented the rules. 

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 LLP. The advisers, both investment bankers and attorneys, discussed whether the deal will pass regulatory muster, the potential for further private equity involvement in the bank space and the outlook for bank M&A activity.

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' liquidity, credit quality and valuations.  

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 for capital raising activity and the risk posed by commercial real estate. 

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, director of policy research at BTIG; Bill Burgess, co-head of financial services investment banking at Piper Sandler; Greg Hertrich, head of U.S. depository strategies at Nomura; Jonah Marcus, partner and portfolio manager at Endeavour Capital; and Chris McGratty, head of US bank research at KBW. In the episode, we discuss the highlights of the panels with fellow moderator, Joe Mantone, the head of S&P Global Market Intelligence's US FIG News team and the host of The Pipeline: M&A and IPO Insights. The panelists offered their view of bank valuations, whether institutions should consider repositioning bond portfolios, takeaways from recent regulatory examinations and the outlook for M&A activity. Click below to access The Pipeline. https://podcasts.apple.com/us/podcast/the-pipeline-m-a-and-ipo-insights/id1670488947

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 support equity investors and the capital markets. He further noted that investors fail to recognize that even if bank earnings are weaker due to net interest margin pressure, they will be sufficient to cover substantial loan losses should they arise.  

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 tightening. They also say that expectations of a U.S. recession remain high, but falling inflation and surprising economic strength signal calming inflation without a significant economic downturn.

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 Center for Business, Law and Public Policy at Columbia Business School and Colombia Law School, discussed the recent liquidity crunch at Silvergate, the asset/liability management lessons observers can learn from the turmoil and the risk that banks face when focusing on a given industry. Baker, who previously served as the chief corporate strategy and development officer at three large banks, also provided insight into the unfolding situation at SVB Financial.    

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 Stovall, director of financial institutions research, and Maureen McKenna, who oversees the firm's commercial bank solutions and community bankers conference. Visit this site for more information about the conference. https://www.spglobal.com/marketintelligence/en/events/in-person/community-bankers-conference-23

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 independents and traditional banks they're looking to disrupt. 

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 decade lows.

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 by S&P Global Market Intelligence. The episode features highlights from that discussion, where the advisers said that transactions — either in the form of whole bank acquisitions or capital raises that bolster balance sheets — could pick up next year as banks gain a better understanding of the regulatory environment, liquidity pressures and the potential for notably for higher loan losses.   Access the full webinar here: https://pages.marketintelligence.spglobal.com/Bank-M-A-Outlook-When-Will-the-Cool-Front-End-Registration-October-2022.html?utm_source=ON24reg

After explosive growth that outperformed the rest of the industry's historic growth in 2021, Northwestern Mutual believes its long-term approach, digital investments to complement its financial advisor salesforce and focus on diversity and inclusion will allow the company to stand out against other life insurers, wealth managers and the biggest banks. In the episode, Michael Carter, executive vice president, CFO and chief risk officer at Northwestern Mutual, discussed the drivers of the historic growth for the life insurance industry, competition with insurtechs, the impact of higher interest rates on the company's investment portfolio, including its commercial real estate exposures, and its focus on diversity and inclusion.

Higher interest rates promise stronger net interest income for the banking industry, but bank stocks are trading at discounted prices because investors are concerned about potential threats to bank liquidity and credit quality, according to KBW CEO Tom Michaud. In the episode, Michaud discussed current bank stock valuations, the impact of higher rates on deposits, liquidity and credit quality, and how those factors are affecting M&A activity.

The Federal Reserve's aggressive tightening of monetary policy has pushed bank bond portfolios deep into negative territory, altered previously struck bank M&A deals and has given pause to some would-be buyers. In the episode, bankers and advisers from Piper Sandler's depository investment bank team and PNC's Financial Institutions Advisory Group discuss how higher rates have negatively impacted bank deal math, tangible book value and changed the way acquirers communicate with the Street. S&P Global Market Intelligence Banking Reporter Lauren Seay highlights discussions with bankers and advisers as well as earnings call commentary from several seasoned acquirers, including Home BancShares, Seacoast Banking Corp., Community Bank System and Provident Financial.

While deal discussions continue and community banks still see acquisitions as an attractive tool for growth, regulatory headwinds have made M&A a little less attractive for growth-mind companies. In the episode, Jonathan Hightower, partner at Fenimore Kay Harrison LLP, discussed the drivers of community bank M&A activity, the impact of rising rates on transactions, how most community banks already satisfy environmental, social and governance considerations and the changing regulatory landscape for community banks, including the agencies' views of deals.   

Large banks' second-quarter results likely helped downplay recessionary fears but many investors will remain on the sidelines until it is clear that a severe recession is not on the horizon, according to Gerard Cassidy. In the episode, Cassidy, managing director and head of U.S. Bank Equity Strategy at RBC Capital Markets, discussed banks' second-quarter results, how institutions' deposit bases are reacting to rate hikes by the Federal Reserve, and what results suggest about the health of the US economy.

The Fed has committed to taming elevated inflation by tightening monetary at a rapid pace, stoking fears that the central bank will not be able to achieve a "soft landing" for the U.S. economy. In the episode, S&P Global Market Intelligence's news team highlights interviews with investors, analysts and economists who say that a recession is a real possibility in 2023 and that small businesses and households with lower incomes, in particular, could feel some pain if that occurred. But the members of the investment community also suggested that large corporates, consumers and banks have strong enough balance sheets to weather a storm — possibly even a "hurricane" — should it emerge.

The current economic headwinds might seem like a "hurricane" on the horizon to some, but advisers and bankers at S&P Global Market Intelligence annual community bankers' conference said institutions could navigate choppy waters. In the latest Street Talk podcast, we share the advice that bankers, advisers and investors offered at the event, including on how to prepare for unprecedented changes in rates and how to accelerate growth through recruitment, incentives and fintech partnerships. Conference participants also offered their view of the potential market opportunity and risks from fintech partnerships as well as their view of current bank stock valuations and the economic environment.

While recessionary fears have grown on the Street, S&P Global Ratings U.S. Chief Economist Beth Ann Bovino does not see a downturn developing this year. In the episode, the economist discussed her outlook for the U.S. economy and inflation, the possibility of a wage spiral and the Federal Reserve's plans to wind down its nearly $9 trillion balance sheet. She also discussed how the Fed likely will tighten monetary policy too much in their effort to get inflation under control and the likelihood of a recession occurring as the central bank tries to initiate a soft landing.

While most banks are positioned for higher rates, institutions might be wise to consider the possibility that rates could turn the other way in the future, according to Darling Consulting Group President and CEO Matt Pieniazek. In the episode, Pieniazek discussed balance sheet positioning ahead of the rate hike cycle, the potential for securities portfolios to move further underwater as rates move higher, and how banks should evaluate how sensitive their deposit bases will be to the Fed's tightening cycle.

After a busy year for dealmaking, Citizens Financial Group sees more opportunities for organic growth going forward, including through its digital bank where it plans to offer more consumer loan products, according to the company's Chairman and CEO Bruce Van Saun. In the episode, Van Saun discussed how elevated inflation and higher rates could impact loan growth and credit quality. He also discussed the company's appetite for additional M&A activity after closing a series of transactions in 2021.

While a number of investors are looking for higher interest rates to drive bank earnings and stocks higher, not all investors are sold on the prospect. Even with the recent selloff, Brad Rinschler, managing partner at Down Range Capital Management, said in the latest Street Talk podcast that he believes valuations of many regional banks remain too high. In the episode, Rinschler and Connor Labozzetta, a partner at Down Range, discussed year-to-date performance of bank stocks, why they think many bank stocks could face pressure in the future and their favorite banks to own.

Many banks have been hesitant to invest excess cash before the Federal Reserve raises short-term interest rates, but they are likely leaving money on the table given the strong move in immediate rates that has already occurred, according to Piper Sandler's Scott Hildenbrand. In the episode, Hildenbrand, chief balance sheet strategist and head of the financial strategies group at Piper Sandler, discussed how banks should view their excess liquidity, investment opportunities in the current market and whether the outlook for interest rates and loan growth should change investment strategy.

A number of banks during fourth-quarter earnings season, including large players like Wells Fargo and Bank of America, unveiled plans to reduce overdraft and nonsufficient fees in 2022 as competitive pressure mounts from neobanks and regulators seek to increase their oversight of the issue. The group of banks that have cut or reduced their overdraft fees own close to 45% of U.S. deposits and likely will pressure many community banks and credit unions to follow suit, according to Lauren Seay, a banking reporter who has covered the topic for S&P Global Market Intelligence. In the episode, Seay explains why banks are making these changes now and discusses how the moves will impact earnings, the competitive landscape and even prompt more M&A activity.