In this week's episode of Industry Focus: Financials, host Jason Moser and Fool.com contributor Matt Frankel, CFP, are doing an IPO roundup. First, they dive into two companies that have recently gone public -- homebuilder Dream Finders Homes (NASDAQ:DFH) and fintech company Affirm (NASDAQ:AFRM). Then they'll take a closer look at what we know about upcoming IPOs for cryptocurrency exchange Coinbase and mortgage lender HomePoint Capital. Finally, Matt and Jason share why they're watching Tanger Factory Outlet Centers (NYSE:SKT) and Ameris Bancorp (NASDAQ:ABCB) ahead of their earnings announcements this week.
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This video was recorded on January 25, 2021.
Jason Moser: It's Monday, Jan. 25th. I'm your host, Jason Moser. On this week's Financials show, we're taking a look at a couple of recent IPOs in the finance space, along with a couple of upcoming IPOs. We'll answer a listener question. We'll wrap it up with one to watch.
Joining me this week: Certified Financial Planner Mr. Matt Frankel. Matt, how's everything going?
Matt Frankel: Just great, I'm excited for our IPO chat. We haven't done this yet.
Moser: Yeah, this will be fun. We've got a couple of companies that just IPO'd we're going to talk about. Then we're going to talk about a couple of companies that you have on your radar. Companies that are going to be IPO'ing soon but haven't IPO'd yet. We'll get your take on what those businesses are all about.
But let's go ahead and start with the two recent IPOs here. I think both are very interesting businesses. I've certainly looked at both, and we'll go ahead and start here with one probably many haven't heard of, it's Dream Finders Homes. Ticker is DFH. This is a company that just went public last week. Small cap, it looks like a $2 billion market cap, so really a small company. But talk to us a little bit about Dream Finders. What does this company do, and how does it make money?
Frankel: They are a homebuilder, as we said. They operate mostly in the Sun Belt region. Just to name a couple of their biggest markets, they're based in Jacksonville. Other big markets are Orlando, Denver, and DC, believe it or not. That's their only Northeast market. You consider DC the Northeast? I don't know.
Moser: Given that I'm from South Carolina, I moved out here from Georgia. Yeah, I do feel like this is the Northeast, but I know most people here try to consider it the South still. We're going to give them the benefit of the doubt and say we're still in the South.
Frankel: Right. But it's only one of their major markets in that Sun Belt area if that makes sense. But anyway, they were founded in 2008. Like you said, they recently IPO'd. They are the 11th-largest private homebuilder. They're not a market leader or anything like that, which that's OK. They've sold about 9,100 homes since 2008. In their 12-year history, 9,100 homes. They IPO'd at a price of $13. It appears that the market likes them, because they are trading for about $21 as I write this.
Interestingly, they are backed by a company that we cover a lot on the show, Boston Omaha. I've mentioned that Boston Omaha has a bunch of minority investments in adjacent businesses. This was one of them. Boston Omaha owned about 6% of Dream Finders pre-IPO. This was a nice little windfall for them.
But for the Dream Finders business, the reason I really like them and wanted to bring them to people's attention is because they have a very asset-light business model for a homebuilder. A lot of homebuilders -- for example, I'm in a D.R. Horton house right now, that's who built my house. They bought all of the land in my neighborhood, developed it into homes, and, one by one, sold them off. It took them about five years from start to finish to do it.
That's a capital-intensive way to be a homebuilder, to buy a giant plot of land like that, develop a whole neighborhood, and hope that people buy them. Dream Finders uses an asset-light business model, meaning that they own options on land, meaning that they have the right to buy land, but they don't actually complete the purchase of the land that they're building on it until they have a buyer lined up.
It's a really capital-light business model. The return on equity was over 30% last year because of this. Most homebuilders are in the teens. It's a really interesting business, really rapid growth right now. They grew their revenue 30% year over year through the first nine months of 2020. I know 2020 wasn't really a typical time in the housing market, [laughs] but they have grown impressively just for the past few years. They are one of the fastest-growing homebuilders in the country. They're not a market leader yet, but I could see them getting toward that direction. I took a look at them a while ago, and I heard that that was Boston Omaha's home builder investment, and I was really glad to see they went public.
I'm not one for playing in the IPO market all that much. I think the last recent IPO I bought was Lemonade, but that was the first one in a couple of years. I might wait to see the price normalized 'till we get a quarter or two worth of earnings to really value the company on. I want to see how they do in a market that's not 2020. We have all their growth numbers from 2020, but we take that with a grain of salt.
Moser: Matt, homebuilding, it's a fascinating market and it's one where it really seems to favor scale. It definitely seems to favor the bigger players in the space. You mentioned D.R. Horton, for example, $28-some-odd-billion market capitalization. That's a company that's been doing it for a while. Obviously, knows what they're doing. With Dream Finders, this is a small company. This is a $2 billion-market-cap business. They don't have a ton of financial resources at their disposal, at least not yet. What are the things that you're keeping your eye on to make sure they're able to continue taking that step to the next level? What are the things we need to be watching to see this company really, to know that they're able to take that step and compete with the bigger players in the space?
Frankel: They've grown a lot through acquisition. They're now one of the private homebuilder leaders in the Charlotte area because of a big acquisition they made last year, for example. Growing through acquisition costs money. You want to see that they have a reliable and relatively inexpensive source of funding, which they don't have yet. They funded their last acquisition by getting a term loan from Boston Omaha, actually. Boston Omaha was an equity and debt investor. But it was like a one-year term loan, they paid something like 14% interest on the loan.
Frankel: They're going to pay it off with the proceeds from the IPO, it looks like, so right now it's not a big deal. But you want to see them establish a better way to fund their growth. That will come as they grow, as they can really prove their earnings out and things like that. That will come. But that's one thing I'm watching. You're absolutely right, scale is everything in home building.
It's not a terribly high-margin industry usually, especially on the lower to mid-range of the market, which is where Dream Finders tends to operate, in the mid-range homes. For starter homes, the reason that you haven't seen a ton of supply and there are such supply constraints is they really haven't been economical for home builders to make. They're very dependent on things like lumber prices which have been high lately, and you want to see the business scale. As they scale, it will get more efficient. That's really what I'm watching.
Like I said, I love the growth-through-acquisition model because home building, aside from the DR Hortons of the world, it's a pretty fragmented market. There's a lot of smaller regional home builders that they could go after. I love that strategy but I'd like to see them be able to finance it a little more efficiently. Because paying 14% interest is not the way to go.
Moser: [laughs] No, I can imagine not. Well, speaking of buy now and pay later, because hey, that's essentially what buying a house is, right? You're just paying that thing off for the rest of your life pretty much or at least until you sell it. Affirm Holdings is another company you have on your radar. Recent IPO as well, just went public at the beginning of the year. It's a business we've talked about a little bit before together. It's certainly one that is starting to get a little bit more exposure here in our Foolish universe.
We get a lot of questions regarding that buy-now-pay-later opportunity. Questions regarding Visa and MasterCard, is this something that investors and those businesses should be concerned about? But let's talk a little bit about Affirm. It just went public. This is closing in on a $30 billion market cap. The market is receiving this company very well. I do understand, to a degree, why. I think we're still learning about the buy-now-pay-later market and exactly how big of an opportunity that really is. But let's talk a little bit about Affirm. What does this company do, and how does it make money?
Frankel: Affirm's goal is to make the credit process transparent, easy, and fair. A lot of people have used Affirm's services without knowing it, especially if you're a Peloton customer. They do buy-now-pay-later financing, which is basically a fancy way of saying installment plans. If you go to checkout on, say, Walmart.com or Target.com or any of those big websites, you might see a button that says pay X amount a month for six months instead of paying in full today. A lot of times, that's Affirm. That's what they do, they offer that option to merchants. It could be zero-interest financing. In some cases, they have to pay interest. It depends on the particular partnership. But they offer buy-now-pay-later plans, Peloton is by far their biggest customer, 28% of their revenue.
A lot of that has to do with, we mentioned, 2020 was not normal. Everybody in the world was buying a Peloton bike. It was like a Sega Genesis when I was younger. Every household wanted one of those in their house. I bet on the left or right of that piano behind you, there is a Peloton somewhere.
Moser: No, no, no. There is no Peloton in this house, Matt. But if there were, it would be downstairs. My wife's into Pilates, so we have a lot of that equipment. We have a treadmill downstairs. I think we're about tapped on exercise [...] for now though.
Frankel: Fair enough. But Peloton could not keep up with sales in 2020. The point is that that is a big risk going forward, to have 28% of your revenue tied to a company who just had a fantastic year because of the pandemic. The big unanswered question is what happens after the pandemic?
Affirm has a lot, they have 6,500 partners including Walmart, Target, Best Buy. There's a lot of big companies that partner with Affirm to offer this option, because a lot of buyers want that. A lot of buyers don't want a credit card that's going to charge them 20% interest. There is a big, big market for people who don't want to pay all the money up front but also don't want to pay a ton of interest. That's a big market.
Frankel: They've had a lot of success with this, and that's why the market is so excited. They make money through their merchant partnerships. They're not doing this for Peloton out of the goodness of their hearts. Peloton is paying them.
Moser: Yeah. That's what I saw. They earn money from the merchant. They get that fee when they convert the sale. They get the interest income on some interest loans. But like you said, it's not necessarily always going to be some form of high-interest debt. That's really what they're trying to steer away from in order to offer folks an alternative to higher-interest credit cards.
Frankel: Right now, I could go apply for a credit card that had 0% interest for 18 months or something like that.
Frankel: But that's an extra step. It's a little confusing. The payments are tougher to keep track of. If I want to buy a TV at Best Buy right now, and want one at 0% interest, I can either open Citibank's website, apply for a new credit card, wait for the credit card to come in the mail then buy the TV. Or I could just go to my Best Buy shopping cart and click on the "pay over six months" button and be done with it.
Moser: Well, and so, to your point there in regard to the market opportunity, it really does feel like this is a service that is really geared toward younger consumers. I think that's a good thing. Particularly when I see the data, it really is clear that younger consumers, and we're talking about folks between 18 and 34 years old, these are consumers who are really more willing to trust their financial services with tech-related companies as opposed to the old bank relationship that perhaps we grew up on.
It's changing a little bit. You're getting these tech companies, these fintech companies that are partnering with banks in order to be able to offer these types of financial services, and consumers are feeling more trusting of those types of tech companies, feeling like maybe they're looking out more for their best interest. It feels like, to me, a lot of these companies, whether it's Affirm or even Lemonade, they are really homing in on that trust factor. Knowing that they have that in with that younger consumer, and it really is all about doing the right thing for their demographic.
Frankel: Millennials, of which I am one of the older examples, millennials are people like my age and like, 10 years younger than me. There are a few things that investors should know about the millennial generation. Like you said, they don't trust traditional banks. There are exceptions, but in a lot of cases, they don't trust the established financial institutions. This is why Robinhood and things like that are such big deals.
There are companies made by millennials for millennials, looking out for their interest. Millennials are anti-fee, they don't want to pay fees or interest, any of that. They want their money to go toward purchases that are going to go into their pockets. They're willing to pay $2,000 for a Peloton bike. But that's all they want to pay. They're not willing to put hundreds of dollars in their credit card company's pocket to do it.
No. 3, millennials want things to be easy. They don't want that -- like I said, I could get a credit card that has 0% interest for 18 months right now. But it's extra steps; it makes the process hard. They want things to be easy. If I could click a button and finance a purchase over six months, why am I going to go through the trouble of opening a new credit card to do it? Those three factors really are resonating with the millennial generation. No offense to the Gen-Xers like yourself. [laughs]
Moser: [laughs] None taken.
Frankel: I know you're a tech-savvy Gen-Xer.
Moser: Well, yeah, maybe, but part of that I guess, has to do with my job. But I think you're onto something there in regard to millennials and I think that's also something that carries on over to, what? Gen-Z. Maybe millennials are Gen-Z. No, it's not Gen-Z.
Frankel: No. Gen-Z's after millennials, but millennials are key because we're entering our prime earning years right now. Millennials, I don't want to quote the exact age range, but I know it ends at 38, because that's what I am. I want to say it's 28 to 38 is the millennial age range right now. They are entering the prime years of their career, and they have money to spend.
That's why American Express's Platinum card has been such a big hit, because of benefits like the Uber credits. Right now, they're doing a Goldbelly credit to get food delivered, which I just used, it was really nice. But things like that are really resonating with the millennial generation who has the money to spend and doesn't want to wait, doesn't want to pay fees, and doesn't really trust the establishment.
Moser: Yeah, it makes sense. It certainly seems like they're on to something, and that's whenever you see a business, they really find that market opportunity, that target demographic, and really cater to that demographic, and then you have to believe that with younger generations to follow, that will be the standard that's set. I think that with Affirm, they definitely are on to something, and we're seeing clearly with companies like MasterCard and Visa, the language in their calls. They are talking about this space as well. They are introducing these types of features into their business models as well. This is certainly something that a lot of companies are out there pursuing, and it feels like Affirm is really one of the prime companies blazing that trail, I guess.
Frankel: Yeah. They are a leader, but before we move on, it's important to note that they are not the only one in this space. They were founded by one of PayPal's co-founders, which I thought Jason would like about this company. But PayPal is launching its own buy-now-pay-later service, which could be a problem.
Moser: Square offers that to their merchants as well. Square offers that feature to their merchant customers.
Frankel: Afterpay is another big one in that space. They're not alone. It's a big market opportunity, but with any big market opportunity, they are not going to let one company have all the fun.
Frankel: You're going to see a lot of the established players like the PayPals and Squares of the world try to get it on the action.
Moser: Yeah, that makes sense. Well, Matt, let's talk about a couple of companies that haven't gone public yet, but their IPOs are impending, I guess is the best word to use. Coinbase, this is an interesting business just based on what they do. This is your favorite part of the financial sector, cryptocurrency. I'm just kidding. [laughs]
Frankel: Well, before we get into this whole segment, I want to say just because we are talking about these two companies doesn't necessarily mean I'm planning on buying the IPOs.
Moser: Right. That's a good point to make. This is not advice to invest in these businesses. We're giving you a little bit more of an understanding of what these businesses are and why folks are paying close attention to these IPOs.
Frankel: Anyone who has listened to us more than once knows that bitcoin is not my favorite place to put money.
Moser: Yeah. Well, with that in mind, because Coinbase is a cryptocurrency exchange. That's essentially what it is. Why does this IPO have you so intrigued?
Frankel: Well, the reason I'm really interested in it is because the cryptocurrency market is almost at $1 trillion in total market cap right now. A lot of the smaller coins are really gaining popularity. Coinbase is adding additional options. They offer 43 different cryptocurrencies on their platform right now. They have $90 billion in digital currency under management right now. They are a big deal. They've done $455 billion in volume since they started, and most of that is pretty recent. There's over 43 million people who use Coinbase. Even if I'm not one of them, some people like it.
What I'm really watching is how much the market's going to think this thing is worth. In December, a pretty good estimate put it at a $28 billion valuation, which, given the size of the market, seems cheap. But then another report a week or two later said it could get up to $75 billion in an IPO valuation. That's a pretty big range for estimates within a couple of weeks of each other, and these were all estimates done by crypto experts. It's not like one was by someone who is down on this space and one's by someone who is really optimistic.That's a pretty big range.
They filed a confidential S-1 filing, so we don't know that much about how much their sales have been, how much their revenue's growing. With crypto prices all over the map over the past few years, it's really tough to even put that into context when you do see the numbers.
Bitcoin's tripled over the past year, so if they say their revenue's tripled, is that just because bitcoin has gone up in price, or is it because the platform is getting more and more attention? There's a lot of questions to be asked. This one is kind of a TBA in terms of when it's going to actually happen. They did a confidential filing, we'll get some more information before they go public. Airbnb did their confidential filing months before they went public. So we don't know the exact timetable. It's entirely possible a SPAC could swoop in and take them public at this point.
But one thing that I saw today that was really interesting: Coinbase is going to sell shares to its members before the IPO, privately. They sent out an email today. They're going to send all their members an email at, they said, noon Pacific Time, which is 3:00 p.m. our time, detailing the process. I am going to be keeping an eye on that to see, because to do that, they're going to have to say something about the valuation.
Moser: I would imagine so. Yeah. [laughs]
Frankel: They're not just going to say, you're going to pay $20 a share. They're going to say what that's based on. I'm going to be paying attention to that. Coinbase is really on my watch list just because I have a lot more questions and answers, is the key takeaway.
Moser: Yeah. Well, that will definitely be an interesting one to learn about, and it feels like the market would receive it probably well, just based on all the enthusiasm in cryptocurrency today. But as you mentioned, there are a lot of questions in regards to the actual business and how it makes its money, and what that is really all dependent on, and we won't know that until more documents come out. I know there's been chatter of this IPO hopefully happening at some point early in February. Again, like you said, it's really to be determined. We just don't know yet, but certainly one to keep an eye on and one that I am certain will garner a lot of interest when it does finally go public.
Let's take a look at this other company. I love your description here. You call it a techie mortgage lender. It sounds right up my alley, man. But this is Home Point Capital, and I want you to tell me a little bit more about this, because when I see "mortgage lender," the first thing I think of is a company like Quicken Loans or Rocket. Is this the same type of business as those?
Frankel: Kind of. They rely more on their relationships with actual mortgage brokers to funnel them business. Everyone knows who Quicken Loans is, everyone knows what Rocket is, everyone knows Bank of America offers mortgages, things like that. Home Point, their ticker symbol, we already know, is going to be HMPT. They haven't exactly gone public yet. They are the third-largest wholesale mortgage lender, which goes through brokers and stuff like that. They are the 10th-largest nonbank mortgage lender in the country, to give you an idea of their size. If you exclude all the Bank of Americas, and Wells Fargos, and stuff like that -- Rocket Mortgage is not a bank, they're in that group. They're the 10th largest nonbank mortgage lender in the country.
The thing that really stood out to me is their growth. They've gone from doing $11 billion in mortgage volume in 2018 to $46 billion through the first three quarters of 2020. Now, 2020 was an exceptionally strong mortgage market. People were refinancing and getting new mortgages more than ever before. I think you and I both refinanced in 2020.
Moser: Yeah. We did.
Frankel: Remember, that's comparing a year to three quarters. When your volume jumps by that much, that's growth, that's not just because of the strong mortgage market. A couple of interesting tidbits. They've already announced our pricing range for their IPO, it is going to price between $19 and $21 a share. They didn't file confidentially, so we know a lot more about their growth than Coinbase. When a company announces their price range, that means expect the IPO soon. I would expect this in the next week. They are selling 12.5 million shares at those prices.
What's really interesting, normally when companies go public through the traditional route, it's to raise capital. If a company is selling a million shares at $20 a share, they're going to make $20 million in the IPO. It's a way to get some new capital in the door. A hundred percent of the shares being sold are from existing investors. The company is not getting a dime out this IPO.
Moser: They're cashing out.
Frankel: Yeah, so a lot of people are cashing out. It's a really interesting company. Like I said, the growth is really what stood out to me. I mentioned the volume numbers, but their market share is growing from 0.7% of the mortgage market to 1.3% over the past couple of years. That's almost doubling their market share in two years. It's a pretty impressive growth rate to me. That's what's really prompting me to dig more into this company and see how the IPO shakes out. Like I said, they're pricing it between $19 and $21. If it jumps to $40 on day one, I'm probably out for the time being. [laughs] But it's one that I'm keeping on my radar. Like I said, I'm not a huge IPO investor, and I only invest in an IPO if I'm super confident in it. I think it's early still, but I think I made the right call on Lemonade at, like, $40 a share.
Moser: Yeah, I think that's working really well.
Frankel: It's about $160 right now.
Moser: It's working out for you so far.
Frankel: I use my IPO calls sparingly, because right now on the show, I'm one for one.
Moser: Yeah. Well, every time I do it, I harken back to just a couple of lessons learned, and I mean, every once in a while, it works out. I noted a little while back, the company I bought shares in most recently is Unity Software. That's a business that I felt a lot of conviction in when it went public. Unity is working out OK, for now, but for every Unity, there's also something like an Eventbrite, where it just doesn't quite work out initially and they got to learn how to be a public company.
Frankel: You understand the software and tech space a lot better than I do. I'm more of the real estate and value investor type. You're more inclined to jump into the software businesses, which I'm a little hesitant about.
Frankel: Looking at your track record, I really can't argue with you.
Moser: So far it's working out, but listen, investing it's a lifelong journey as they say.
Frankel: Now Jason spends his time in the stables, he's gone too well.
Moser: [laughs] Yeah. Investing in animal medicine. [laughs]. Oh, man. We'll definitely keep an eye out on that. I'm certain that is a business we will cover here on the show going forward too. So excited about that, excited to learn more about Home Point Capital as well. OK.
Matt, let's move on here to a listener question we got on Twitter the other day. This comes from a listener with the handle @FooleryJoe. I like that, @FooleryJoe. @FooleryJoe asks, "Question for the financials episode this week: Do bonds, at their current yield, have a place, any Foolish portfolio?"
I'm going to go straight to our resident Certified Financial Planner, Mr. Matt Frankel. What do you think about this question here from Joe Foolery?
Frankel: The short answer is it depends. It's pretty well known if you have a good investing background, bonds are also known as fixed-income investments. They are generally designed to produce a steady stream of income without much downside risk to your principal. The reason is because if you buy bonds, at the bonds' maturity, you get your money back. If I pay $1,000 for a bond from a company, I will get that back whenever the bond matures. The problem is right now, interest rates are so low, they're not paying much of anything, especially the high-quality ones. If I buy a 10-year Treasury, I'm not going to get that much income out of it.
Moser: [laughs] No.
Frankel: I think they are just over 1% right now on 10-year Treasuries. It's better than it was. But it's more of a question of how much preserving your capital is a priority. If you can afford to survive the ups and downs of a market, let's say you're in your 30s like I am, and you have a few decades left till retirement, you can watch your portfolio go up and down. No doubt do you have a diverse collection of good businesses in there, you can have much less in bonds than you would say if bonds were yielding 4% or 5%. I know if bonds were yielding what they were in the '90s, I would have a whole lot more of them in my portfolio than I do right now. [laughs] I think you would agree with that statement.
Moser: I would. Yeah, absolutely.
Frankel: Then again, in your 60s right now, if you're almost at the finish line of retirement, your priority is preserving capital, bonds definitely still have in place. You're not going to get that type of capital preservation in the stock market, you're just not, even if you're buying like blue chip dividend stocks. Think of the most boring rock-solid company you can. Jason, any names come to mind?
Moser: Procter & Gamble (NYSE:PG).
Frankel: There you go. Look what they did in March of 2020. It did not preserve the investors' capital to have money in Procter & Gamble in March of 2020. If it's a question of capital preservation more than anything. If you have money that you need, fixed income or bonds still have a great place in your portfolio. People younger, a lot of them are going pretty much almost 100% stocks right now. If you're in your 30s and 40s, I really can't argue with that if you're doing it in a diverse and correct way.
Moser: Yeah. You need to take into consideration things like if you're a homeowner, the equity that you have in your home. There are other types of investments that can be a little bit more protected. I like how you talk about the, are you in the grow-your-wealth state or the protect-your-wealth state? If you get that really does dictate a lot.
I will say, I reached into some of our resources here at the Fool and just looked at some of the advice in Rule Your Retirement, and the team over there, and this is just a roundabout way of looking at it, there is context and whatnot to be considered here. But generally speaking, they're looking at this from the perspective, more than 10 years out from retirement, maybe you have 6% of your portfolio in bonds. If you're within 10 years of retirement, maybe you have about 20% of your portfolio and bonds. If you're in retirement, maybe you have closer to 25% of your portfolio in bonds.
Again, that's suggested guidance that doesn't take into consideration where all of your money is allocated. Again, if you have gold or real estate, or anything else, just things to keep in mind. But certainly, it feels like the closer you get to retirement, obviously, the more a role they potentially should play.
Frankel: Yeah, I would agree with that. They do have a position in your portfolio, but not as the income generators that they once were.
Moser: Yeah. Well, Matt, before we finish up here for the week, let's dig in to ones to watch. I've got a stock I'm watching, but what's the stock that you are watching coming week?
Frankel: Well, last week, we saw the bank earnings come out. This week, we're going to start seeing some real estate earnings, so I am watching Tanger Outlet. Ticker symbol is SKT. They report today after the close. People who are listening to this, it might have reported by the time you're listening. But I'm looking at that to get a gauge of how retail performed in the fourth quarter.
Because a lot of these mall REITs, real estate companies, they did pretty well in the third quarter because the pandemic wasn't gone, but the numbers were lower in the summer and fall months than they are right now, so people were more eager to venture out. I'm curious to see how the holiday season treated retail. Tanger just recently announced they're bringing back dividends, which is pretty nice for a retail REIT. I want to see their profitability really justifies that.
Moser: Well, there you go. Yeah, I have just one final bank that I'm really following here, this coming week. Ameris Bancorp earnings are out on Thursday. 2020 wasn't the greatest year for banks in general, and I think the S&P Financials index, that was one of the few underperformers. That was one of the few areas of underperformance in the market last year.
It's feeling like maybe banks are set up for a little bit more success this year. This is a small-cap bank, it's like that small-cap home-builder. Banking is one of those businesses where size really does help. Ameris is getting a little bit bigger via that acquisition of Fidelity not all that long ago, absolutely playing out on their non-interest-bearing deposits, becoming a greater percentage of deposits is kind of like free money, essentially.
Looking for trends that we saw here with the big banks, though, on loans growth versus deposit growth, I suspect we'll continue to see that deposit growth robust, whereas lending is just a hit or miss right now. Then really, just interested in their language for 2021, how they see the year shaping up. I know that they had been at least keeping an open mind toward acquisitions here going forward. So anytime you can get any language regarding potential deals, too, that's always interesting. But a well-run bank dealing with a tricky time right now with interest rates and as a shareholder, I remain a happy and patient one, but we'll be looking for the earnings on Thursday.
Matt, I think that's going to do it for us this week. As always, man, I appreciate you taking the time to jump in here and share your knowledge with our listeners.
Frankel: [laughs] Of course. Till next time.
Moser: Absolutely. Remember, you can always reach out to us on Twitter @MFIndustryFocus, or you can drop us some email at firstname.lastname@example.org.
As always, people on the program may have interest in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear.
Thanks, as always, to Tim Sparks for putting the show together for us. For Matt Frankel, I'm Jason Moser. Thanks for listening, and we'll see you next week.