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The Growing Power of Big Banks Like JPMorgan May Cause Community Banks to Merge

Both big bank and small bank stocks have treaded water for most of 2018 despite a strong first half for earnings. But, that could be about to change if mergers descend on the sector.
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Bank stocks -- both large and small -- have acted mixed this year despite strong first half results. 

But that may be poised to change in the back half of 2018, and it could be fueled by merger and acquisition activity in the community and regional bank spaces. With large banks such as JPMorgan Chase (JPM) - Get JP Morgan Chase & Co. Report and Citigroup (C) - Get Citigroup Inc. Report growing ever more powerful, managing director Chris McGratty of KBW, a Stifel Company, tells TheStreet regional and community banks may look to do deals to gain more scale. 

In May, Fifth Third (FITB) - Get Fifth Third Bancorp Report made a splash by plunking down $4.7 billion to purchase MB Financial to expand into Chicago.

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McGratty spoke with TheStreet Tuesday at the 2018 KBW Community Bank Investor Conference, held by parent company Stifel Financial (SF) - Get Stifel Financial Corporation Report .

JPMorgan Chase and Citigroup are holdings in Jim Cramer's Action Alerts PLUS member club