Interview with Banking Analyst Specialist for Small- and Mid-Cap Banks in the West and Texas: Challenging Revenue Growth Environment for Smaller Banks
67 WALL STREET, New York - December 4, 2012 - The Wall Street Transcript has just published its 2012 Regional Banking Equity Analysis 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: Investing in Regional Banks
Companies include: Wells Fargo (WFC), USB (USB), Zions Bancorp. (ZION) and many others.
In the following excerpt from the 2012 Regional Banking Equity Analysis Report, an expert analyst discusses the outlook for the sector for investors:
TWST: Do you cover Southwest and Pacific banks?
Mr. Rabatin: Yes, I cover banks in Texas, the Pacific Northwest, California and Hawaii.
TWST: What are the investment themes in that space right now?
Mr. Rabatin: For 2012, it's obviously a year of a difficult revenue growth, given the low interest rate environment. So what investors are focused on are the institutions that can clearly grow via strong good loan growth, and then also banks that still have leverage to improving profitability from credit-quality trends improving. Those would be the two main things. Generally speaking, they are also looking at banks trying to keep their profitability level at solid levels until things change from an interest-rate perspective.
TWST: Are banks doing anything to try to make up for the low interest rates and the loss of revenue?
Mr. Rabatin: The Southwest and Texas is an economy that's growing faster than most of the economies in the country, so it's an area where there is some pretty good C&I loan growth in particular, and so the institutions are clearly earning out more success than the average area of the country in growing their loan portfolio, which is maybe a critical thing in 2012 for offsetting obvious margin pressures.
TWST: What about M&A in this space? Is there something that's going on right now?
Mr. Rabatin: M&A is pretty tough right now. I think everyone wants to be involved and they are doing some transactions, but the good sellers don't want to sell for a low price and for the sellers that are stressed, generally speaking, it's tough to figure out how to make those deals work from an accounting perspective, so I think it may be sometime before we really do see M&A finally start to emerge.
TWST: What about looking specifically at California and the Pacific Northwest? Are the events in those geographies different from others?
Mr. Rabatin: In the Pacific Northwest, it's interesting because...
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