You are a free subscriber to Me and the Money Printer. To upgrade to paid and receive the daily Capital Wave Report - which features our Red-Green market signals, subscribe here. Finally... I Non-Frothy, Non-Insane, Investment Trend...M&A in the banking sector is about to take off... get out in front of it...
Dear Fellow Traveler, My daughter should be finding out about her soccer team’s victory right about now. She missed Saturday’s game - strep throat. Tough kid, but that won’t cut it. Yesterday we hit a birthday party where her entire grade showed up. Somehow, none of the girls mentioned the soccer game to her. I’m expecting a full pity party later. Her grandfather, Tim Melvin, usually calls on weekends to recap the soccer games. No post-game analysis this week, but there’s something else worth analyzing with Tim… the massive M&A wave heating up in regional banking. Finally, we’re seeing movement in one of the most successful, conservative, and actually sane corners of the U.S. financial markets. The question is why you’re not well-versed in this trend… The Next Banking Consolidation Wave Just StartedFifth Third’s (FITB) $10.9 billion acquisition of Comerica (CMA) announced Monday isn’t just another deal. This is the starting gun for what could be the biggest banking M&A cycle we’ve seen in decades. Add Huntington’s merger with Veritex, PNC's grab of FirstBank, and the Pinnacle-Synovus deal in July. The pattern’s crystal clear - regional banks are racing to get bigger or get bought. The math is WILD… We had over 12,000 community banks in 1987. Today we’re down to about 4,000. Most experts think we’ll end up with around 1,500. That means thousands more banks are getting acquired, and Trump’s lighter regulatory touch should speed up the timeline. But that’s not all driving the deal flow… Smaller banks are getting crushed by compliance costs, cybersecurity expenses, and the need to build digital platforms that don’t suck. Deposits are everything in banking. There are only two ways to grow them: massive population growth in your market or buy another bank. Then there’s the reserve issue. Total banking reserves fell below $3 trillion, a significant milestone. Banks are scrambling for deposits, and if they can’t find them, they sell. Since most small-town America isn’t exactly booming, acquisition becomes the obvious play. The regulatory environment completely shifted. Treasury Secretary Scott Bessent wants to “smartly reinvigorate” financial institutions with more efficient regulation. The FDIC reportedly went back to the 1998 merger rules. Both the OCC and FDIC reinstated 1990s guidance. Deals that would have faced heavy scrutiny under the previous administration are now getting fast-tracked. The Real StoryThe Fifth Third-Comerica deal shows the strategic logic perfectly. Fifth Third gets a significant presence in Texas, California, and the Southeast - some of the fastest-growing markets. Comerica shareholders get a premium. The combined entity achieves scale to compete with mega-banks. This is just the beginning. Morgan Stanley expects M&A activity to accelerate in the second half of 2025, fueled by $4 trillion in dry powder and three years of pent-up demand. CEOs are adapting to rapid regulatory changes and getting comfortable with the new environment. The opportunity is massive. Community banks represent one of the last undervalued asset classes in an otherwise expensive market. With regulatory green lights, strong balance sheets, and a desperate need for scale, we’re looking at a potential feeding frenzy that could unlock trillions in value. Smart money is already positioning in quality community banks trading below tangible book value. When this consolidation wave hits full force, the returns could be extraordinary. Tim Melvin’s Banking ExpertiseIf you want to profit from this wave, you need someone who knows how to spot the best takeover targets. That’s where my father-in-law Tim Melvin comes in. Tim’s been analyzing community banks for over two decades with an incredible track record of identifying undervalued institutions before they get acquired. His community bank strategy has crushed the S&P 500 over 22 years… How? By focusing on something few people do in these frothy markets… Tim focuses on banks trading below tangible book value - essentially buying assets for less than liquidation value while waiting for inevitable buyout offers. With the regulatory environment now favoring consolidation, Tim’s expertise in this specialized corner could be invaluable for capitalizing on what might be the biggest banking M&A cycle in decades. So check it out… and show the man some support. That way, he can keep sending noisy toys to my house… Stay positive, Garrett Baldwin About Me and the Money Printer Me and the Money Printer is a daily publication covering the financial markets through three critical equations. We track liquidity (money in the financial system), momentum (where money is moving in the system), and insider buying (where Smart Money at companies is moving their money). Combining these elements with a deep understanding of central banking and how the global system works has allowed us to navigate financial cycles and boost our probability of success as investors and traders. This insight is based on roughly 17 years of intensive academic work at four universities, extensive collaboration with market experts, and the joy of trial and error in research. You can take a free look at our worldview and thesis right here. Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.
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