Big banks and regionals strategize for the second half of 2017

With the first half of 2017 drawing to a close, bank executives gathered this week at the Morgan Stanley Financial Services conference to discuss their companies’ performance thus far and, more important, outline their priorities for the rest of the year and beyond. Here are some of the highlights.

Signature Bank: Sayonara to taxi loans?

Taxi medallion loans have been a sore spot for Signature Bank in New York and now the $40 billion-asset lender may be looking to unload its entire taxi portfolio. Medallion values have plummeted in recent years as the likes of Uber and Lyft have encroached on the taxi industry's turf, and private-equity funds and other investors see an opportunity to acquire distressed taxi loans on the cheap, said Signature CEO Joseph DePaolo. "We're working on some bulk sales. We continue to sell individually. We're hopefully entertaining offers to exit the portfolio," he said.

Comerica: Drilling for oil

Dallas-based Comerica is poised to start slowly rebuilding its energy loan portfolio after spending much of the past year offloading many loans it had made to oil and gas firms. Curtis Farmer, the president of the $73 billion-asset bank, said energy producers’ oil and gas reserves were revalued at higher rates this spring, increasing Comerica’s loan yields and boosting its customers’ confidence in borrowing again. “We've actually seen a few new opportunities that are attractive … like the Permian Basin” in Texas, he said.

PNC: Wooing the consumer

PNC Financial Services Group has made no secret of its desire to increase consumer lending, and its best opportunity to do so is by offering credit cards to its existing customers, said Rob Reilly, the Pittsburgh company’s chief financial officer. Only about 20% of PNC’s customers have a credit card with the bank, which Reilly said is below the average of some of its competitors. Moreover, PNC’s card customer base is largely made up of prime or super-prime borrowers. “In some respects we've overshot a little bit in terms of the high quality, and that's why the balances haven't grown as fast,” Reilly said.

Fifth Third: Keeping an eye on retailers

Retailers continue to bite the dust at a record pace, and the $140 billion-asset Fifth Third Bancorp has some exposure to the sector, with about $4 billion of commercial mortgages and business loans outstanding. So far, though, the Cincinnati company’s retail book hasn’t shown signs of stress, said Richard Stein, Fifth Third’s head of commercial banking. “We haven't seen deterioration yet, but it is something … we're monitoring very closely,” Stein said.

Discover: Bullish on student lending

The student loan market may be overheating, but Discover Financial Services still likes the business, said Roger Hochschild, its president and chief operating officer. “We don't do any loans for profit schools [and] over 90% of our loans are co-signed by the parent,” he said. Another plus: “We don’t see that many new entrants” to the student-lending business, Hochschild said.

BB&T: Hungry for deals again

BB&T may once again be on the prowl for acquisitions. The Winston-Salem, N.C., company has taken a breather from M&A since buying Pennsylvania’s Susquehanna Bancshares and National Penn Bancshares in 2015 and 2016. Now that the integration of those banks is nearing completion, Chairman and CEO Kelly King is keeping an eye out for potential sellers, particularly those that have a surplus of low-cost deposits. BB&T has also been an active acquirer of insurance agencies over the years, and King said it is open to doing more such deals. “There’s nothing about growing the insurance business that bothers me,” King said.

JPMorgan Chase: Expanding the footprint

Rather than bulking up through acquisitions, JPMorgan Chase is looking to add branches in markets where it has little to no retail presence. Chase already has 5,300 branches in 25 states and the District of Columbia, but there are large swaths of the country where it is barely visible, including the Mid-Atlantic and the upper Midwest. “The branch is still a very powerful vehicle for us in driving retail banking,” said Gordon Smith, JPMorgan's CEO of consumer and community banking.