Conventional bank deals have returned as a fixture in the industry in recent quarters.
Among targets with less than $1 billion in assets, failed banks have largely been replaced by willing sellers. That has kept the total turnover of assets about as high as it has been at any point in the past decade. (Data on deals by assets sold and number of announcements are shown in two tabs in the graphic below. Interactive controls that filter by deal type, target asset size and time period are described in the captions. Text continues after the graphic.)
Small acquisitions always account for the vast majority of announcements. Among the roughly 3,200 conventional deals between 1999 and mid-November, less than one-tenth involved targets with more than $1 billion and only about 63 involved targets with more than $10 billion in assets.
(Conventional deals encompass buyouts of whole institutions and exclude deals for branches and failed banks. Transactions of all kinds that were subsequently terminated have been excluded from consideration here.)
The numbers reflect an industry where the vast majority of institutions are small, even after decades of consolidation that has concentrated assets within the largest banks.
Activity has also picked up among larger banks, although it takes only a handful of announcements in any given quarter for them to make a relatively strong showing.
Including branch acquisitions, there have been 11 deals for businesses with $2 billion to $10 billion in assets so far this year, a run rate that rivals the volumes seen during the middle of the past decade.
Dry spells among big banks have been common historically. There were no announcements in the $2 billion to $10 billion category from the fourth quarter of 2004 to the second quarter of 2005.
On the other hand, big deals account for the majority of assets sold. Purchases of businesses with more than $10 billion of assets have represented about 75% of total assets sold in conventional deals since 1999. (The most recent announcement in this size category was M&T’s (MTB)
Among the smallest banks, turnover of assets through deals stalled only briefly in 2008. The churn was restored as failures picked up, peaking at about $12 billion of assets at small banks that went bust in the third quarter of 2010.
(Since 1999, the median target size in deals for failed banks, at about $210 million, has been about twice as large as the median for conventional deals.)
About halfway through the current quarter, there have been 24 announcements of conventional deals, roughly on pace with the first and second quarters but below the pace of the third quarter.
Before the recession, when
