Tom Mitchell, Senior Analyst at Miller Tabak + Co., LLC, Interviews with The Wall Street Transcript: M&A Wave Rumbles for Regionals in the Midwest and Southeast

Wall Street Transcript

67 WALL STREET, New York - July 1, 2013 - The Wall Street Transcript has just published its U.S. Banking Review 2013 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: U.S. Banking Review 2013

Companies include: Wells Fargo & Company (WFC), BB & T Corp. (BBT), First Midwest Bancorp Inc. (FMBI), Regions Financial Corp. (RF), FirstMerit Corp. (FMER), Huntington Bancshares Inc. (HBAN), Citizens Republic Bancorp, Inc (CRBC), US Bancorp (USB), Capital One Financial Corp. (COF), Fifth Third Bancorp (FITB), First Niagara Financial Group (FNFG) and many more.

In the following excerpt from the U.S. Banking Review 2013 Report, an expert analyst discusses the outlook for the sector for investors:

TWST: Under the new banking guidelines, are sizable U.S. banks going to be able to make acquisitions?

Mr. Mitchell: I think so, but it doesn't have to be U.S. Bancorp (USB), it doesn't have to be Capital One (COF). I mean, there are literally a couple of dozen good-size U.S. banks that I don't think would have any problem swallowing $3 billion to $15 billion banks. Now Fifth Third (FITB) - which we also like a lot - Fifth Third is a large bank and in that case probably the interest would more likely be a foreign bank than a U.S. bank.

TWST: Why are foreign banks looking at the U.S. market given all the new rules and their historic lack of success?

Mr. Mitchell: We can tick off a few reasons. Let's start with Japan. Japan has been living with deflation for 25 years. The yen, although it has come off of a peak - if the new government policy of weakening the yen is going to succeed, and it's not sure that it will, having a strong yen is one impetus to spend the money while you're still at a peak or close to a peak before that currency becomes cheaper. So any Japanese bank that has already been thinking about expanding in the U.S. - now under the spur of what could be a very consistent policy of the Bank of Japan following the lead of the government with the LDP back in charge of the government - if you were already considering it, this would be a time to step up.

Unlike Japan or Europe - we can bring the Europeans in if you want to, but the Europeans will have plenty of excess capacity it looks like for the next 12 months to 18 months at least, maybe more - interestingly enough the underlying growth in the U.S. economy looks like it's actually healthier than it is for either Europe or Japan. That underlying growth feeds into stronger deposit bases, stronger opportunities to develop new business relationships. Not to be forgotten is that if the whole industry is in fact positioned like a coiled spring so that earnings will take off once interest rates start to move up, then there's a huge cyclical opportunity in getting in before that happens, so we think that there's a whole separate argument for the Canadian banks - which is that the Canadian banks, while they have a lot of opportunity at home, there's not the consolidation opportunity because there's only six or seven banks in Canada; there's 7,000 in the United States, so it's a logical progression.

TWST: As you talk with investors, what's their response to this thesis?

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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