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New Alliance Bank CEO Peyton Patterson has lived the banking M&A cycle from all vantage points. She created New Alliance, the second largest bank in Connecticut, in 2004 with an innovative three-way merger. Late last year, she signaled an end to her tenure when she engineered its $1.5 billion sale to First Niagara.
March 28 -
In absolute terms, there has been a fair bit of churn in states like Florida and Texas, but relatively little as a proportion of those states' total deposits.
April 4 -
The Justice Department said Friday that it will not challenge Hancock Holding's deal to acquire Whitney Holding of New Orleans as long as the companies sell eight branches.
April 1 -
Iberiabank Corp. is on track to buy two Louisiana banks, ending the Layfayette company's seven-year lull of deal making in the state.
March 11 -
Hancock, of Gulfport, Miss., is buying the larger New Orleans-based Whitney. Hancock would gain an entree into Texas and Louisiana and a bigger presence in Florida and Mississippi.
December 22 -
Liberty Bank in New Orleans lost so many customers after the 2005 hurricane that the CEO had to get creative to help it survive. Now he aims to build the nation.
July 1 -
Many Gulf Coast banks are in damage-control mode as they scramble to figure out how badly the oil spill could hurt their bottom lines.
June 11
Tick-tick-tick-tick …
In Louisiana, the dominoes are falling.
Four banks based in the state have agreed to sell since December, when Hancock Holding Corp. of Gulfport, Miss., said it would buy Whitney Holding Corp., a New Orleans stalwart. It is the briskest consolidation pace there in years and some analysts say Whitney's decision to cash out provided the spark.
"I never would have thought that Whitney would sell," said Dan Bass, an investment banker and managing director at FBR Capital Markets, who called the latest wave the "Whitney factor."
Bass said that, to other Gulf Coast bankers, the sale of a 128-year-old bank with nearly $12 billion of assets is a sign to "take the chips off the table and look at longevity down the road."
Some analysts said there are other factors drawing out eager parties. Sellers are accelerating plans due to rising costs from more regulation. Previously, economic and natural disasters steeled buyers and sellers.
Robert Taylor, CEO of the Louisiana Bankers Association, said that most Louisiana banks fared better during the recession because of a conservative approach born of dealing with the savings and loan crisis of the early 1990s, spikes in oil prices and Hurricane Katrina.
"In the late '80s and early '90s, this state was just devastated," Taylor said. Now, "bankers are really good at … figuring out how to protect their business in the new banking environment."
The economies along the Gulf Coast, especially in Louisiana, Mississippi and Texas, "have generally held up better than the national economy," said Peyton Green, an analyst at Sterne Agee & Leach Inc. "The banks are making money, so you have an overall backdrop where M&A can happen."
Louisiana's insured banks lead Gulf Coast states in capital retention, with a total risk-based capital ratio of 15.77% at Dec. 31, according to the Federal Deposit Insurance Corp. Mississippi banks averaged 13.2%, while those in Texas finished the year at 12.8%.
Opportunities to buy failed banks have been scant; only one bank has failed in the state since 2002. That led many consolidators to turn to traditional deals.
With capital aplenty, Home Bancorp Inc., Iberiabank Corp. and MidSouth Bancorp Inc., all based in Lafayette, La., have been acquisitive. Iberiabank is particularly active; this year it has agreed to buy in-state rivals Cameron Bancshares Inc. in Lake Charles and Omni Bancshares in Metairie.
Home Bancorp last week said it was buying GS Financial Corp. in Metairie. (Home bought the failed Statewide Bank in 2010.)
"I've seen more activity than I have in a long period of time," said Rusty Cloutier, MidSouth's president and CEO.
Cloutier, whose company said Monday that it would buy five Dallas-area branches, wants to buy banks in its home state. "We've been looking the last five years, but we've never been able to land a deal," he said.
Among the recent acquisitions, community bank sellers are much larger, with the smallest target being the $89.3 million-asset Greensburg Bancshares Inc. In 2007 the biggest bank sold was the $132 million-asset Louisiana Community Bancshares Inc.
Deal values have also risen, averaging $395 million among the sales of the past six months, according to SNL Financial. None of the deals disclosed in 2007 topped $15 million.
Oil prices, commodities and agriculture "have done pretty well, so you don't see the discounted pricing," said Tom Lykos, a managing director at Commerce Street Capital LLC.
Whitney's $1.8 billion sale, which should close this quarter, is the biggest deal in the state since the $23 billion-asset Hibernia Corp. in New Orleans sold to Capital One Financial Corp. in 2005 for $5 billion.
Sellers are inclined to sell while suitors abound and before rising costs pinch their bottom lines and make them less attractive. Taylor said this is especially true for the rural banks in Louisiana that will have difficulty finding the talent needed to comply with the new regulatory framework.
Cloutier said he wants community banking to survive, but he isn't above capitalizing on the fallout from reform.
The Dodd-Frank Act has "really helped activate the market," Cloutier said. "I'm still fighting very hard for [the future of] community banks even though I'm acquiring them."
