Investment thesis · Live
EverBank and WaFd are merging into a $75bn bank, and the first invoice lands with the core processor they leave behind
Bank mergers look like fewer clients for core processors; each deal actually pays a contract termination fee and forces a platform re-selection.
Published September 8, 2026 · 180-day horizon · catalyst
Basket return
-5.3%
equal weight, since publication
The market over the same window
-1.8%
benchmark for this basket
Edge over the market
-3.5%
in percentage points
Causal chain: US bank merger wave accelerates (EverBank plus WaFd, $75bn) → Core contracts run 5 to 7 years with early termination clauses → Acquired bank exits its core early and pays deconversion fees → Survivor must consolidate onto one core platform → Near pure margin one-time fees plus longer, larger renewals → Jack Henry, purest and separately disclosed exposure → Fiserv and FIS, largest installed bases and the upsized tier
What this thesis rests on
Each one is a statement that has to be true. We go back to every live thesis on a schedule and check these against public sources, so each leg carries either what we found or the date we look next.
Checked every 14 days. First review due September 22, 2026.
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Jack Henry discloses deconversion fee revenue at least 20 percent above the year earlier quarter in at least two of the quarterly reports it files after publication.
financial · Open
First check due September 22, 2026
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US federal banking regulators (OCC, FDIC or the Federal Reserve) approve at least 60 bank or thrift merger applications in the six months following publication.
regulatory · Open
First check due September 22, 2026
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The EverBank and WaFd combination receives regulatory approval or closes before 30 June 2027.
operational · Open
First check due September 22, 2026
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Fiserv reports year over year organic revenue growth of at least 4 percent in its Financial Solutions (banking) segment in every quarterly report filed during the 180 day horizon.
financial · Open
First check due September 22, 2026
US bank consolidation is accelerating again, and the EverBank and WaFd combination announced this week, creating a lender of roughly $75 billion in assets, is the visible tip of it. The reflex reaction for anyone holding core banking software is negative: two customers become one, so the addressable base of American banks and thrifts, already down from over 18,000 in the 1980s to under 4,500, shrinks a little further. That reflex is the wrong way round for the next several quarters, and the reason is written into the contracts themselves.
Core processing agreements run five to seven years and are explicitly priced on the assumption that the bank stays. If a client leaves early, whether because it was acquired or because it switched vendors, it owes a termination payment that typically covers a large share of the remaining contract value. In the industry this shows up under a specific name: deconversion fees. Jack Henry discloses them as their own line in its revenue disaggregation, Fiserv and FIS book equivalent termination revenue inside their banking segments. The critical feature is margin. There is no incremental cost of delivery attached to a contract buyout, so the money drops through to operating income almost intact. A merger wave is, mechanically, a wave of these payments.
Companies in the basket
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