< The 2015 All-America Research Team

Total appearances: 6

Analyst debut: 2009

After having spent last year at No. 3, Morgan Stanley’s Kenneth Zerbe is back in second place, the position he held in 2012 and 2013. “Ken’s experience and straightforward analyses are always helpful when picking through all the regional banks,” applauds one investment manager. Zerbe has an optimistic stance on America’s midcap banks, crediting in particular the impact of an expected increase in the Federal Reserve’s overnight lending rate, “which will boost bank net interest income,” he notes. He also foresees potential benefits from an uptick in consolidation, with “higher short-term rates driving more M&A as banks that are liability-sensitive either acquire to improve their interest-rate sensitivity or sell.” At the same time, however, near-term upside could be limited because valuations already appear to reflect the positive rate outlook, the researcher cautions. Moreover, rates might not rise as quickly as the market is pricing in, “which could lead to multiple compression as consensus earnings-per-share estimates move lower,” he predicts. Given those worries about the potential for a slower-than-expected pace of rate hikes, Zerbe is recommending that clients favor growth names, such as BankUnited of Miami Lakes, Florida, and New York–based Signature Bank. In addition, he sees opportunties in firms for which “idiosyncratic factors” could lead to outperformance. One such is New York Community Bancorp, a Westbury, New York–based multibank holding company whose management is looking for a sufficiently large acquisition to bolster earnings and “help it cross over the $50 billion [asset] threshold” to be designated a systemically important financial institution, the analyst explains. Salt Lake City’s Zions Bancorp is another example, he says, because new senior executives and board members “appear to have given the company a new perspective regarding performance.”