Election Results May Force Some Banks to Sell

By Witkowski, Rachel | American Banker, November 13, 2012 | Go to article overview

Election Results May Force Some Banks to Sell


Witkowski, Rachel, American Banker


Byline: Rachel Witkowski

WASHINGTON a Community bankers hoping that a Republican landslide at the election box this week would ease their regulatory burden are now reassessing their profit prospects a and independence. A aA lot of people had hopes that [Mitt] Romney would unleash some of the animal spirits in the economy,a said John Corbett, president and chief executive of $2.4 billion-asset CenterState Bank of Florida in Winter Haven. aNow, thereas more certainty of the status quo which is slow growth, low interest rates and big government.aA Although itas still unclear what the election will mean for bankers, most observers expect regulators to move faster to implement the Dodd-Frank Act. A aThe reelection of President Obama does suggest that it will be full speed ahead for the Dodd-Frank rulemaking process,a said Eugene Ludwig, chief executive officer of Promontory Financial Group.A That is bad news for many small banks, who fear the financial reform law will gut profits and add to their compliance burden. A aWeare going to get more regulations and a tightening down on consumer rules,a said Rusty Cloutier, president and chief executive of $1.4 billion-asset MidSouth Bancorp (MSL) in Lafayette, La. aThe President, the Senate and the House leadership will all turn to the regulators and say, adonat you dare let another banking crisis come on this watch.aa

While the results may not have been what most bankers wanted, at least they are now more certain about the onslaught of regulations coming their way.A As a result, many banks once hesitant to sell at current low prices may reconsider.A aSome boards that were holding out and hoping things would go back to the way it was a few years ago now realize thatas probably not realistic,a said Dan Bass, a managing partner at FBR Capital Markets. aFor some of these banks, this [election] will probably be the tipping point.a

Cloutier estimates that the country will lose at least 1,000 banks to consolidation during the next three to five years.A Unlike earlier this year, bankers now argue that mergers and acquisitions wonat come in a crashing wave. Instead, itas likely that the weaker banks will gradually sell themselves as regulations increase and earnings stay flat or decrease.A aYouare not going to see a huge surge in acquisitions,a said Ed Wehmer, chief executive of $17 billion-asset Wintrust Financial (WTFC) in Rosemont, Ill.A

aThe reason is a lot of these guys are still not healthy enough. When we apply our marks [to a potential selleras books] thereas nothing left.a

Matt Hames, the former president of family-owned First Cherokee State Bank in Woodstock, Ga. …

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Election Results May Force Some Banks to Sell
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