-
Private equity, new regulatory costs and declining benefits from failed-bank deals are some of the big factors that will determine who buys and sells in the coming year.
December 31 -
Buyers of failed banks and the Federal Deposit Insurance Corp. have mutual interests in closing out loss-share agreements even before they are due to sunset in coming years.
December 12 -
First Financial Bancorp (FFBC) in Cincinnati has agreed to buy Insight Bank in Worthington, Ohio.
December 20 -
When it bought the failed bank and thrift units of Irwin Financial Corp. from the Federal Deposit Insurance Corp. last week, First Financial managed to get terms so attractive that others are taking notice.
September 24 -
First Financial Bancorp announced plans to trim its expense base by $17.1 million over the next year.
October 25
First Financial Bancorp's (FFBC) M&A bucket has gone from barren to brimming in just a few weeks.
The Cincinnati company which is sitting on substantial capital thanks to its attractively structured deals for failed banks agreed last month to buy two open banks that would provide it an entree into Columbus, Ohio. Then on Monday it said it was entering Fort Wayne, Ind., by
The deals themselves are modest, involving $500 million of assets, but they represent some delayed promise for First Financial and perhaps the broader M&A market.
In truth, it has been for awhile. Its
"They pulled off one of the best failed-bank deals, and the market anointed them as a smart acquirer," says Chris McGratty, an analyst at Keefe, Bruyette & Woods. "They had the currency and didn't do anything with it."
It wasn't for a lack of trying, says Claude Davis, chief executive of First Financial. Davis has been vocal over the years about the company's desire to deploy its excess capital. The company also gained industry attention by paying out all of its earnings through dividends for a couple of years to prevent the capital account from getting larger in the absence of acquisitions.
"We've been looking. We've said publicly that we've been looking and it was nice to identify these opportunities," Davis says.
At the same time, Davis says he has not let pressure from investors and others affect his decision-making. "We don't worry or talk about external expectations. We didn't focus on size as much as we did the market, and we wanted a good growth platform."
Ross Demmerle, an analyst at Hilliard Lyons, says that investors overall were willing to wait because they were
"The main topic on conference calls has been capital allocation," Demmerle says. "Once they stopped the payout, the big question was, 'So you're going to make acquisitions now, right?'"
Davis says the company has been looking for the right entry points to key markets it has identified in Ohio, Indiana and Kentucky. Columbus was one of the major markets it wanted to enter, he says. He declined to detail how the acquisitions of
"Suffice to say as part of our ongoing process to reach out to all the markets where we have an interest, we know the good banks there," Davis says.
The team it announced it would recruit is made up of lenders formerly with Tower Bank (TOFC) in Fort Wayne, which announced in September that it had agreed to sell itself to Old National Bancorp (ONB).
The fact that First Financial is doing something is perhaps more important than the size of the individual deals, says R. Scott Siefers, an analyst at Sandler O'Neill, who highlighted the addition of the lenders in a research note Monday.
"I'm not sure I've ever written about the hiring of a team of lenders," Siefers said in a follow-up interview. "But it is important because it shows momentum, flexibility and optionality for First Financial."
Davis says he is continuing to look for other potential acquisitions, too. Although larger transactions are becoming increasingly popular and First Financial is experienced in large deals the Irwin transactions doubled the size of the company Davis says he isn't necessarily looking for a big splash.
"A deal has to be big enough to dedicate the resources and to create current and long-term value, but otherwise there is no minimum," he says. "On the high end, there is a lot more risk. [It] doesn't mean we wouldn't contemplate a larger transaction you just have to be very aware."
