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Oxford Bank in Michigan has terminated its planned sale to Level One Bancorp due to regulatory delays and an improvement in Oxford's financial condition.
May 31 -
FirstMerit (FMER) in Akron, Ohio, said Friday that it has completed its purchase of Citizens Republic Bancorp in Flint, Mich.
April 12 -
The company announced two deals in the first quarter, ending a three-year drought after raising millions to buy banks.
April 8 -
The $5.8 billion-asset holding company of Chemical Bank in Midland, Mich., said Monday it has completed its $8.1 million purchase of 21 branches from Independent Bank (IBCP) in Ionia, Mich.
December 10 -
Talmer Bancorp has agreed to buy and recapitalize First Place Bank in Warren, Ohio, in a deal that will work its way through the bankruptcy process.
October 29
Acquisition activity has slowed to a drip, but Chemical Financial (CHFC) in Midland, Mich., is getting ready to act should the floodgates open.
Chemical filed a $100 million shelf registration earlier this month. The move positions the well-capitalized company to pounce if it finds a deal that would otherwise require additional equity.
"There haven't been any deals in Michigan so far in 2013, but we think it is going to happen," says Lori Gwizdala, the $6 billion company's chief financial officer. "There was no immediate need to raise capital, but with this sitting on the shelf we are ready should the right opportunity arise."
A "be-ready" strategy fits into a larger theme of bank M&A. Deal activity is slow perhaps even slower than buyers' expectations. A lack of announcements, however, contrasts significantly from what deal makers say is happening behind closed doors.
"There is a lot of chatter," says John Donnelly, managing director of Donnelly Penman & Partners, a Grosse Pointe, Mich., investment bank. "We are going from speed dating, where everyone is talking, to more formal sit-downs. Buyers and sellers are much more serious today than they have been in a long time."
The disconnect between chatter and deals leaves a lot of room for ambiguity, so being prepared to raise capital is better than raising equity and waiting to deploy it, industry observers say.
Like Chemical, First Interstate BancSystem (FIBK) in Billings, Mont., filed a $160 million shelf registration in May. The prospectus also mentions possible acquisitions.
"It is prudent to have the shelf out there," says Brad Milsaps, an analyst at Sandler O'Neill. "From an investor standpoint, it is better than running the risk of having a bunch of capital sitting there."
Several banks were overcapitalized in 2009 and 2010 and are hunting for ways to use the capital and lower their tangible common equity ratios to around 8% or 9% to normalize returns on equity. Chemical's tangible common equity ratio was 8.1% at March 30.
Though activity has been slow nationwide, Michigan has been especially dry. Despite having a weak economy before the downturn, just 13 banks have failed there. That compares to 56 in Illinois since 2008.
With the exception of FirstMerit's $912 million purchase of Citizens Republic, open-bank deals have been scarce. Citizens Republic's sale
Chemical has been able to
Chemical is looking for banks statewide, except for the southeast part of Michigan that includes the Detroit area, for acquisitions, Gwizdala says. Chemical doesn't have a target size, she says.
Michigan's economy has also improved drastically; that has also brought challenges to M&A.
"The acquisition market continues to be slower than what we thought it would be," Gwizdala says. "The banks are mostly healthy and well capitalized in Michigan, and I think that is part of the reason we haven't seen a lot of deals."
In mid-May, Oxford Bank in Michigan
Chemical could also be motivated to stay competitive.
Talmer Bancorp in Troy, Mich., has also
"Chemical has been a force in M&A over the past 12 to 15 years, but Talmer is emerging as a force to be reckoned with, too," Donnelly says.