Why Exhausted Bankers Mean Big Profits by Tim Melvin, Benzinga.
Last month, the CEO of a community bank in the Philadelphia area decided to retire. Frederick “Ted” Peters, the CEO of Bryn Mawr Bank Corp. ( BMTC), is stepping down as CEO at the end of 2014. Mr. Peters has been a bank CEO for 28 years, and has started and successfully sold two banks during his career. During his tenure at Bryn Mawr, he has overseen the acquisition of five banks, and a sixth deal should be completed before he leaves at the year’s end. It seems that this activity has prepared him for his next career move: He plans to start a hedge fund to invest community bank stocks. Hedging Bets On Bank Stocks In an interview with Philadelphia Inquirer reporter Jane M. Von Bergen, Mr. Peters outlined why he was choosing this new career path. “We’re in an industry that has seen a lot of consolidation because of the low [interest] rate environment, squeezing banks. We’re seeing increased regulatory pressure on banks. Every year it gets worse." He continued: "If you buy a stock that is taken over, the increase in its price the very first day is anywhere between 25 to 75 percent.” Mr. Peters further explained the type of bank he was interested in buying. "There are certain characteristics: The CEO is 62 or older. There’s a large family position that needs liquidity. They’ve been under a regulatory order, which is a very good thing if you want to buy a bank that might be taken over. Those banks have management fatigue because they are getting beat over the head all the time." Related Link: Think Small Banks For Big ProfitsStricter Banking Standards Mean Corporate Burnout Management fatigue and executive exhaustion are very real factors in the bank consolidation wave that is developing, and Mr. Peters makes an excellent point about those operating under consent orders and memorandums of understanding with various government agencies.