3-16 - 2nd behind technology in % of US Economy Shift from...

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(3/16/2011) KBW- Scott Anderson- ‘How Banks Work’ Banking industry on new wave of consolidation Slow growth + higher costs + higher capital= lower ROE= consolidation How banks make money Regional bank- vast majority from Net interest income (around 70%) BOA= majority from NII, but more diverse (more emphasis with service fees, asset management, commissions from investing Lend-borrowed net interest margins decreasing yearly CRISIS- 2008/9 saw jump in nonperforming assets % TARP relief- $10 trillion invested Coming back, but still waaaay behind Financial Sector:
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Unformatted text preview: 2nd behind technology in % of US Economy Shift from % financial assets in just banks to pension funds, mutual funds, etc. MASSIVE consolidation since 1985, top 3 share 1/3 total % M&A Real estate loans have become majority since 1980's ROA/EPS decreasing for KBW/Banks in general At cycle end, many banks are looking for consolidation for help as they are 'wounded' Case Study: BB&T with Regions Bank Merger Together would create #5 market share Dominant presence throughout SE, Texas, Would need capital raised, possibly too big/too risky portfolio...
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