Bank stocks and regional bank stocks in particular have rallied over the last month and there is further room to run, according to Joe Fenech, Chief Investment Officer at GenOpp Capital Management.
In the episode, recorded on July 16, Fenech said that sentiment towards bank stocks is improving and that the long bear market in bank stocks ended in May 2023. The investor argued that the recapitalization of New York Community Bancorp earlier in 2024 could serve as the turning point of this investment cycle now that “smart money” has rescued one of the sector’s biggest problems. He also sees net interest margin pressure easing and eventually becoming a tailwind for banks and argued that not all commercial real estate (CRE) loans should be seen as high risk and resulting in sizable losses. He also believes M&A activity will increase, driven by succession issues and the need for scale and technology investment.

Tales from Top Performers features conversations with executives at high-performing banks about their view of current issues, and the greatest challenges and opportunities they see ahead. This episode features executives from three of the highest performing banks in the country: Curtis Griffith, chairman and CEO of Lubbock, Texas-based South Plains Financial; Paul Egge, CFO of Houston-based Stellar Bancorp; and Skip Hageboeck, CEO of Charleston, W. Va.-based City Holding Co. The bankers outlined how they've been able to maintain strong deposit franchises in the face of fierce competition, their outlook for loan growth and credit quality, and the greatest challenges and opportunities they see over the next year.

Deposits and liquidity remain at the forefront for most bankers and the intense competition for core funding will eventually lead to a resurgence in M&A activity. That was the message delivered by a variety of presenters at S&P Global Market Intelligence’s annual community bankers conference on May 20 and 21, but they acknowledged that transactions face some challenges in the near term, including lower valuations, fewer would-be buyers and regulatory pressures that tend to require more capital in deals. The episode features commentary from banking experts at Ampersand, Curinos, StoneCastle Partners, Performance Trust Capital Partners, Fenimore Kay Harrison, Stephens, Janney Montgomery Scott, Piper Sandler and Klaros Capital.