June / July saw no new reported Capital Markets transactions in the community bank subordinated debt market. With one more bank failing in July, Heartland Tri-State Bank, potential investors are going to be extremely cautious in their evaluation and purchase of bank debt and are closely watching the price movements in the regional bank index (KRE), and pricing in bank issued debt in the secondary markets, which is active. Regardless of pricing and low activity, some items that investors will still be focusing on are credit quality, loan and deposit concentrations, adverse impact of negative AOCI on balance sheet (Tangible Common Equity), percentage of uninsured deposits, and contingency funding levels. For assistance in positioning your bank properly in these areas, please feel free to reach out to us and we will have a member of our Performance Management Group arrange an initial consultation.
We are seeing some transactions in the bank M&A space, but it is unclear at this time when the bank sub-debt market will be active and healthy enough to re-emerge. Our team is watching the markets and announcements closely and will keep our clients up to date on any new developments.