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Wall Street Transcript Interview with Matthew C. Schultheis, of Boenning & Scattergood, Inc.: M&A Transactions for Small Banks in the U.S. to Rise to 180 Deals in 2013

67 WALL STREET, New York - January 10, 2013 - The Wall Street Transcript has just published its Northeast and Mid-Atlantic 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: Pockets of Growth in Northeastern Banking - Heightened M&A Activity - Demutualization and MHC Conversion Opportunities - Fiscal Cliff Effects on Banking

Companies include: Webster Financial Corp. (WBS), First Niagara Financial Group (FNFG), Cardinal Financial Corp. (CFNL), Signature Bank (SBNY), Valley National Bancorp (VLY), Provident Financial Services, (PFS) and many others.

In the following excerpt from the Northeast and Mid-Atlantic Banks Report, an expert analyst discusses the outlook for the sector for investors:

TWST: How about M&A? We have heard now for several years about a wave of M&A. Is that a big piece of your thinking as you look at this space?

Mr. Schultheis: I'm a little bit different from those who say the M&A wave is coming. I think the M&A wave is here, but we don't recognize it for what it is because the multiples haven't expanded as much. Prior to the Great Recession, banks were being acquired for 2.5 or three times tangible book; now they are selling for 1.6 times tangible book. It's a lot less exciting. But the truth is, in the Mid-Atlantic region, we were actually on pace at September 30 to do the average number of deals in 2012, going back to 1994. So if we live in a mean-reverting world, we're at the mean in that geography. We're approaching the mean for the nation as a whole and in the Northeast. So it's clearly picked up off the bottom; it's clearly arrived. My guess is that we get a gradual build in the number of deals from here. I think we're going to go from 150 deals to 180 per year, and then maybe 180 to 215. I think that's going to be the way this wave will grow, rather than going from a 150 to 500 in a year.

Right now, the M&A focus is on banks with less than $1 billion in assets. The size of institutions selling will likely build gradually with $10 billion and $20 billion banks starting to sell in the latter portion of 2013.

TWST: What's the overall investor interest level in this space and how has that been trending?

Mr. Schultheis: I would argue that the institutional investor is back in the bank space, has been back in the bank space for some time and shows continued interest. They understand the space, they want to know which names they should be buying for whatever fits their particular investment strategy. Back a couple of years ago, the people who were willing to look at the bank space sort of fell into three categories: you had some deep value investors; you had some special-situation people who wanted to learn about banks, because there were a lot of broken toys out there; and you had bank-specialist investors - that's basically all they do. Now, what we see is...

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.