Finance
Why banks are (probably) rooting for Donald Trump
US banks have a lot riding on the outcome of Election Day even if they’re not 100% sure how either candidate might treat their industry.
The “knee-jerk reaction,” according to KBW analyst Chris McGratty, is that a Donald Trump victory will mean a return to looser regulation of banks and more leniency in approving the sort of corporate mergers that produce big profits for Wall Street giants.
A Kamala Harris win, on the other hand, may mean that a more aggressive period of overseeing the nation’s largest financial institutions under President Joe Biden will continue.
“In my investor conversations, it definitely feels like people are pricing in Trump,” McGratty told Yahoo Finance. “So initially, if the election goes to Harris I would think banks would sell off,” he added.
The country’s largest lenders have had a great year thanks to the economy’s resilience during a period of elevated interest rates and a rebound in their investment banking and trading operations. The hope is next year could also turn out well, if lending and Wall Street dealmaking churn higher while interest rates fall.
An index tracking 24 of the largest domestically chartered US commercial banks (^BKX) is up 27% so far this year, outperforming the broader financial sector and major stock indexes.
Those other indexes for the financial sector (XLF), Nasdaq Composite (^IXIC), S&P 500 (^GSPC) are up 24%, 21% and 20%, respectively.
The consensus among industry observers is that a Trump White House might be more favorable for a run-up in financial stocks. After all, bank stocks rose 20% following the three months after Trump was elected in 2016.
But the challenge for bank executives as they assess the impact of a new president is that neither Trump or Harris have said much about how they want Washington to oversee the biggest banks in the US.
So instead their track records have largely spoken for them.
The Trump administration of last decade delivered a big corporate tax cut, and it also rolled back some big bank rules that were imposed in the aftermath of the 2008 financial crisis.
Harris, on the other hand, has touted her clash with big banks when she was California’s attorney general as an example of her willingness to take on powerful interests.
One big unknown is what either administration would do with a new set of controversial capital rules proposed by top bank regulators that would require lenders to set aside greater buffers for future losses.
The requirements are based on an international set of capital requirements known as Basel III imposed in the decade following the 2008 financial crisis.
US-based bank holding company First Financial Bancorp has completed its previously announced acquisition of Westfield Bancorp and its subsidiary, Westfield Bank.
In June, First Financial agreed to acquire Westfield Bancorp from Ohio Farmers Insurance Company in a cash-and-stock deal valued at $325m.
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With the addition of Westfield Bank, First Financial’s total assets now stand at $20.6bn, strengthening its presence in the Midwest region of the US.
The acquisition is said to expand First Financial’s commercial banking and wealth management services in Northeast Ohio.
Westfield Bank’s retail locations and related services will now operate as part of First Financial’s network.
These branches will retain their current branding until the completion of conversion process, which is expected to occur in March 2026.
The conversion will merge the two banks’ products, processes and operating systems.
Westfield Bank clients will continue to receive services through existing channels, and will receive information about account conversions in the coming months.
First Financial president and CEO Archie Brown said: “This is an exciting step in the growth of First Financial, as the addition of Westfield Bank opens new possibilities for growth and profitability for us in an attractive market.
“We can now bring our wide range of solutions in consumer, commercial, specialty lending and wealth management to new clients, while expanding our geographic footprint for our current clients.
“The First Financial team is thrilled to welcome the Westfield Bank team members to the First Financial family.”
The transaction follows First Financial’s recent expansion activities in the Midwest.
In 2023, the company established a commercial lending presence in Northeast Ohio.
Earlier this year, First Financial announced BankFinancial, the parent company of BankFinancial, National Association, in Chicago, Illinois.
Furthermore, the company has also established a commercial banking presence in Grand Rapids, Michigan.
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