On March 7, 2017, Jonathan and I recorded lucky episode 13 of The Bank Account where we discussed the implications of stock prices, particularly in connection with bank mergers. We note that the current levels of stock pricing in the banking sector appears to be driven by expectations for higher interest rates, tax reform, and regulatory relief, in that order of likelihood and importance. We also note that if these expectations aren’t achieved, bank stock prices are likely to take a hit.
As mentioned on the podcast, Jonathan was recently quoted in an American Banker story on bank merger activity.
“We’re telling buyers to be aggressive and sellers to be thoughtful,” said Jonathan Hightower, a lawyer at Bryan Cave. “The potential for legislative changes, lower corporate taxes, higher rates and reform to Dodd-Frank … are already priced into bank stocks. There could be a pullback if any of those things don’t occur.”
Subsequent to recording, the American Banker also published an excellent look at increasing skepticism for the chances for meaningful regulatory relief.