Money money money money, money
Some people got to have it
Some people really need it

Listen to me why'all, do things, do things, do bad things with it
You want to do things, do things, do things, good things with it
Talk about cash money, money
Talk about cash money- dollar bills, why'all

The O’jays, in what is probably the most cutting song ever about money.
It also has one of the greatest opening bass lines ever put down on record.

One thing we haven’t seen much of in the past six months or so are mergers or acquisitions. Todays’ announcement of the BB&T merger with SunTrust has broken a very long drought of banking mergers. There has not been one significant merger since the financial crisis of 2008.
Even though 2018 was considered a great year for M and A activity it really took place in the beginning of the year and the last quarter was one of the slowest periods in quite some time.
Considering the regulations and legislation around the banking industry it’s not really a surprise that there have been so few mergers. Banks tend to want to stay under certain cap rules and prefer not to be in the eyes of the geniuses in Washington. The top five banks became top five more because they had to rather than wanting to and have developed very successful business models within the confines of the legislations that created them.

Others are loath to do the same. To see todays BB&T/SunTrust merger and the fundamental ideas behind it, maybe that will change.

To compete on a national scale, banks can either go the takeover route or open up businesses in each state they want to operate in. Opening up branches in individual states usually is a months’ long process and it’s expensive. Lawyers, regulators, banking commissions, all have to be dealt with and for the most part, most states are not worth the bother. However, if you can buy a mid-size bank that has locations across a certain region, it makes it easier and in the bigger picture, cheaper.
So, a fairly large banking concern has to weigh the benefits of becoming a too-big to fail institution with the benefits of scale in a much larger region.

To some extent, deregulation in the banking industry may be making it a more viable choice and the overall health of the banking industry has made it a necessary choice. Even though the banking sector has been trailing the overall market, the health of the industry may never have been better and bigger banks are looking at this downturn as an opportunity. One they haven’t had in over ten years. Expect to see more of these mergers.

Keeping it close and staying with my mix.

50% Stocks
25% Fixed Income
25% Cash