Strong fundamentals, increasing M&A set the table for small cap bank stocks

"Street Talk" is a podcast hosted by S&P Global Market Intelligence that takes a deep dive into issues facing financial institutions and the investment community.

Listen on Apple Podcasts and Spotify.

While large bank stocks have significantly outperformed their smaller counterparts over the last few years, the tide could finally be turning, according to Jonah Marcus, partner and portfolio manager at Endeavour Capital.

Marcus said in the latest Street Talk podcast there are positive tailwinds for the banking sector, including increasing bank M&A activity, net interest margin expansion and deregulation, that will serve as a greater benefit for small and mid-cap banks.

"I can enumerate a whole host of tailwinds that played out last year. And I can't name that many headwinds that happened last year actually," Marcus said in the episode. "If we were doing like a health check, like it would be a bunch of checks in the good column and nothing in the bad column, yet we're still frustrated generally about valuation."

In the episode, Marcus shared his thoughts on the operating environment and the impact on fundamentals and valuations. The veteran investor also shared his views on the valuation disparity between large and small banks; his outlook for credit quality and bank M&A activity, and the importance of technology and a bank's data strategy.

READ MORE about the outlook for US banks, the industry's fourth-quarter earnings and current bank stock valuations.

Bank margins, earnings set to expand, possibly defy credit concerns

Net interest margin expansion has driven returns higher across the banking industry in 2025. Earnings growth should continue in the coming quarters, even as credit costs continue to migrate higher.

Bank call capsules: U.S. Bancorp CEO warns; Bank OZK's CRE; Peoples' preferences

S&P Global Market Intelligence presents a wrap-up of earnings conference calls from Jan. 15 through Jan. 21.

Bank call capsules: JPMorgan Chase NDFI loans; Wells Fargo's NII; BofA's outlook

With earnings season underway, S&P Global Market Intelligence presents a wrap-up of earnings conference calls held on Jan. 13 and Jan. 14.

Q4 2025 credit quality results drive best, worst US bank stock performance

Overall, US bank stocks remained relatively stable between the market's close on Jan. 15 and the close on Jan. 22, with the KBW Nasdaq Bank index falling 0.26%.

Glacier Bancorp in talks with potential bank targets in Mountain West, Southwest

The Kalispell, Montana-based company is engaging in conversations with banks in the Mountain West and Southwest, where M&A activity is rising, President and CEO Randall Chesler said during an earnings call.

'Irrational pricing' dissuades Simmons First on commercial and industrial loans

Loan pricing is the biggest competitive challenge Pine Bluff, Arkansas-based Simmons First National Corp. faces, President and CEO James Brogdon said on a Jan. 21 earnings call.

Card threat, investor positioning pressure stocks of big US banks after earnings

The Big Four bank stocks fell despite earnings per share surpassing analysts' expectations for the fourth quarter of 2025 and little change in forward consensus estimates.

Large US bank stocks drag down index as Q4 2025 earnings reports kick off

US banks underperformed the broader markets in the week ended Jan. 15, with the largest banks' stocks falling the most as the industry began reporting fourth-quarter 2025 financial results.

US bank net interest margins set for more expansion in 2026 as tailwinds persist

US banks are poised to build on an industry-wide net interest margin expansion streak in 2026, with additional rate cuts expected to drive strong loan demand and lower funding costs.