Magazine article American Banker

Washington Quagmire Spurs More Banks to Consider Selling

Magazine article American Banker

Washington Quagmire Spurs More Banks to Consider Selling

Article excerpt

Byline: Allison Prang

An increasing number of bankers are growing tired of playing a waiting game with Washington.

The banking industry was overcome with optimism when Donald Trump was elected president, fueled by a belief that the incoming administration would roll back regulation and introduce meaningful tax reform.

Post-election euphoria tamped down M&A talk as bankers were hopeful that promised change, paired with rising interest rates, would justify remaining independent. The pace of consolidation though Aug. 8 is off nearly 7% from a year earlier, based on data from Keefe, Bruyette & Woods and S&P Global Market Intelligence.

There are signs bankers are getting restless as regulatory relief and tax reform have taken a back seat -- at least publicly -- to a stalemate on health care and a host of foreign and domestic crises.

Bankers are worried that "things probably aren't going to change as drastically as everybody had hoped," said Bob Wray, managing director of Capital Corporation, adding that his Prairie Village, Kan., firm has picked up multiple clients looking for buyers.

Some clients, who tend to have less than $500 million in assets, have expressed frustration with a "lack of progress in Washington," Wray said.

The logic makes sense, said Tony Plath, a finance professor at the University of North Carolina at Charlotte.

"Everyone expected more on the policy side," Plath said. "There's a lot of disappointment in the industry ... and that is leading some banks to seek a different path."

Early March represented an inflection point of sorts for banks and their investors. The KBW Nasdaq Bank Index, which jumped 32% between the election and March 1, has fallen by nearly 6% since then.

While the reversal might make potential sellers nervous, bank stocks still remain high enough to give aspiring buyers sufficient purchasing power for financially viable deals, industry observers said. …

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