Regional Banking Stock Picks for 2014 and Beyond: A Wall Street Transcript Interview with Christopher Marinac, Managing Principal and Director of Research at FIG Partners, LLC

Wall Street Transcript

67 WALL STREET, New York - January 31, 2014 - The Wall Street Transcript has just published its Southeast & Midwestern Banks Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Interest Rates and Loan-Growth Strategies - Regulatory Outlook Gains Clarity - Investing in Regional Banks - Heightened M&A Activity - Consolidation in Regional Banking - Increased Lending Opportunities - Heightened Banking Competition - Benefits from Higher Interest Rates

Companies include: SCBT Financial Corp. (SCBT), PacWest Bancorp (PACW), BB & T Corp. (BBT), BNC Bancorp (BNCN), Ameris Bancorp (ABCB), First Defiance Financial Corp. (FDEF) and many others.

In the following excerpt from the Southeast & Midwestern Banks Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Last year was kind of interesting from a bank perspective. What was your take on how the group did during 2013?

Mr. Marinac: It was a much more robust year in terms of total performance than most of us expected, analysts and investors alike. There was a 30%-plus increase in the broad sector indices, which caught a lot of folks by surprise, if you take an honest assessment of where we and others felt the year was going to be 12 months prior. But the reality is it was a very good year. We had some very positive things happen, particularly valuations occur. We did see some meaningful transactions on M&A occur. Even though there weren't as many as everyone wanted to see, we saw some meaningful deals, which definitely woke up the lion, and that was positive for overall stock prices.

From the fundamental perspective, the industry did OK, not great, and what I mean by that is revenue growth is still challenging and loan growth is a bit difficult. It's awfully competitive in the industry right now, and it will probably stay that way for quite some time. We all would love to see interest rates go higher, but nonetheless the market is what it is and banks are forced to make some fundamental changes, and that is starting to play out and starting to become reality. Those changes are beginning to occur, particularly on the expense side, which I'll elaborate later. But this all plays into why the stocks did much better than expected this past year.

There was a belief that the industry was going to continue to be on good footing, and frankly the equity markets did well also. When you have the S&P 500 rising 29% that also parlays into a strong year. The bank stocks tend to be correlated pretty heavily with the overall equity market, so if the equity market does well, banks tend to do well also. So that certainly helped. Since most people expected this to be a high 20% year for the market, banks would have been much more favorable radar screens a year ago, but the reality is the equity market in general did better than expected, and that simply helped the banks.

The banks sort of led the market the last several months, which we're pleased about, and we think it is going to be more of a stock picker's environment this year than ever before. Many banks did well because of the sort of tailwind that occurred the last six, seven months in the sector.

TWST: Where are the banks at this juncture relative to the new regulations? Have they fully accommodated?

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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