Highlight of the Week
Regional Banks Report Q2 Earnings
- Regional and mid-sized banks have been focused on retaining and growing their deposit bases since March. These banks largely beat expectations and held steady capital and liquidity levels in the second quarter.
- Banks that were not as successful at maintaining their deposit bases have sought consolidation with other institutions in order to strengthen their balance sheet.
- Last week, Banc of California agreed to buy PacWest, Dream First Bank purchased Heartland Tri-State Bank out of FDIC receivership, and Atlantic Union announced acquisition of American National Bank.
- As outlook shifts to a “soft landing” scenario, regional banks continue to navigate through the rising interest rate environment. Expect to see more banking M&A in a few categories: (1) “Going Smaller” transactions – i.e. combining two entities and simultaneously selling off/writing down assets (2) FDIC-assisted transactions and (3) Traditional M&A activity for banks looking to capitalize on depressed values.