Seacoast Banking Corp. of Florida, a prolific acquirer, is constantly growing and evolving.
Yet it is a perennial member of American Banker's annual
The $10.8 billion-asset Seacoast made a string of deals, all in Florida, over an eight-year period through 2021. It followed up with two more in January of this year — Sabal Palm Bancorp and Business Bank of Florida Corp. — and in October it acquired Apollo Bancshares and Drummond Banking Co.
Seacoast's latest deal and what would be its biggest, a $488.6 million agreement to buy Professional Bank in Florida, is slated to close early in 2023.
With the combined scale" of all the deals this year, "we will bring to market a larger balance sheet, a greater digital product set and the resources to become South Florida's most competitive community bank," Seacoast President and CEO Charles Shaffer told analysts after announcing the Professional deal in August.
A big part of those resources are the people of Professional and other acquired banks, he told American Banker, making it vital to bring them into the Seacoast fold without major hiccups. This involves upfront work — making sure the banks Seacoast buys have similar cultures and corporate values — and then meeting with new staff members early and often after deals close.
"When we're evaluating M&A opportunities, we always look for cultural traits that align with ours and we've learned that meeting associates very early on in the process is critical to our success," Shaffer said.
The acquisition of Professional "will be our 16th acquisition since 2014 and we've built a very strong, people-focused integration plan, including in-person town hall-style meetings with the Seacoast leadership team and a formal peer coach program," Shaffer added. "We also acknowledge that we can always do things better — and we make it a priority to adopt best practices from the banks we're acquiring."
Seacoast may be the most active acquirer on American Banker's Best Banks to Work For list, but it is hardly the only M&A-focused company in the rankings.
More than a dozen banks on the list recently inked deals or were active M&A acquirers prior to the pandemic.
Observers said companies that are able to successfully integrate acquisitions without sacrificing employee morale are those that do in fact seek out selling banks that have similar workplace cultures and approaches to employee development. They also plan in advance to devote substantial time and effort specifically to onboarding acquired banks' workers.
"These are often experienced buyers who have sophisticated due diligence programs that include getting a really thorough understanding of the banks they are buying, learning about their people and how they work, and what needs to be done to make the most of their strengths and help them make the transition to a new combined company," said Damon DelMonte, an analyst at Keefe, Bruyette & Woods.
Bigger, more opportunities
Count b1Bank in Baton Rouge, Louisiana, in that camp.
The $5.5 billion-asset bank has grown nearly fivefold by assets over the past five years as it pursued a dual strategy of organic growth and M&A. The latter resulted in several bank acquisitions.
"We have been very mindful of the effects rapid growth can have on our culture. Our strategy has been to focus on our five guiding principles: relationship-driven teamwork, thoughtful, disciplined decision-making, meaningful communication, doing the right thing the right way and striving to be the best through continual improvement," said President and CEO Jude Melville.
"Over time, they have become intuitive in nature to us; we talk about them, we hire for them, we acquire for them, we mentor towards them, we live them," Melville added.
Jacob Thompson, managing director of investment banking at Samco Capital Markets, said it's impressive when any buyer can seamlessly incorporate an acquired team into an existing one, because that isn't what happens in a majority of cases.
"The big challenge you face with any transaction, even those with the most thorough due diligence, is the integration of people," Thompson said. "No two companies' cultures are exactly alike. You have personalities and egos and people who are used to doing things a certain way, and it can be really challenging to get all of them to make the transition with you. A lot of the time you see some attrition you don't want to see; talented people can view a merger as a time when they need to reconsider their options."
Thompson said those that avoid such growing pains are banks that not only provide high-caliber training to acquired staff but also convince them of the merits of working for a larger company — from more promotion options to bigger customer bases that present greater revenue opportunities and, by extension, better pay.
"So while there are meaningful challenges, any smart buyer is also pursuing an acquisition to make bigger market share gains, create scale, geographic diversity and more profitability, and those things are important to bankers that are developing careers," Thompson said.
Lawrence White, an economics professor at New York University, said companies that not only sell their strengths to new employees but demonstrate to each of them how to capitalize on this tend to have far more success.
"There's pros and cons in every growth opportunity you come across," White said. "With M&A, it's really about putting the time in and really explaining why the pros outweigh the cons, why the deal is the right thing to do and why these new staff members can benefit from it."
Long M&A runway
To be sure, bankers' view of near-term M&A activity recently dimmed due to the specter of recession and increased regulatory challenges.
Among the 114 bankers surveyed by Stephens.in September, 81% said they expected a deceleration in M&A volumes over the following 12 months. It marked the highest share of bankers forecasting a slowdown since Stephens began its surveys in 2017.
Bankers most often cited "economic uncertainty" as the primary reason behind the anticipated slowdown, according to the Stephens survey. Lofty
"No question, credit quality becomes more of concern as the economy tapers off," said Ken Thomas, founder and CEO of Community Development Fund Advisors in Miami.
With M&A, it's really about putting the time in and really explaining why the pros outweigh the cons, why the deal is the right thing to do and why these new staff members can benefit from it.
Additionally, some would-be buyers have lost interest in the wake of elevated regulatory scrutiny. There were
Long-term, however, the catalysts for M&A remain firmly intact, and most bankers and analysts anticipate a resurgence in coming years.
While taking more time to assess targets, acquisitive banks remain interested in M&A for all the reasons that fueled deal surges in recent years — pursuit of scale, geographic diversity, talent and greater resources to invest in technology.
Sellers, struggling to keep pace with the expensive tech spending of larger banks and broad competitive headwinds, are looking to join larger banks and create more cost-efficient digital offerings and loan products for customers.
"It's probably more a matter of when, not if, M&A picks back up," said Brad Milsaps, an analyst at Piper Sandler. "Even now, you have some deals getting done."
A case in point: The $37 billion-asset Prosperity Bancshares in Houston agreed in October to
The deals mark the first for Prosperity in the current decade. However, the bank closed 10 acquisitions in the decade leading up to the 2020 pandemic. It most recently closed its
Cullen Zalman, Prosperity's senior vice president of banking and corporate activities, said the bank learned during its past M&A runs that it must prioritize outreach to the targets' staff to help them adapt.
"We've spent weeks and weeks and weeks putting together a smart integration plan that absolutely prioritizes people," Zalman said. He called that vital because "nothing is a layup."
