Bulking up: 2018's biggest bank deals so far
June 25, 2018 6:45 PM
chokniti - stock.adobe.com
Though bank M&A started off the year slowly, activity has picked up more recently, especially for larger transactions. Five of the year’s biggest deals to date by value have been announced in May or June, including some that involve regional banks eager to announce transactions.
More regional banks could follow in the second half of the year after lawmakers lifted the systematically important financial institution threshold to $250 billion from $50 billion. (The change for institutions with less than $100 billion will go into effect shortly; those between $100 billion and $250 billion will have to wait on guidance from the Federal Reserve Board.)
Conventional wisdom has long been that institutions needed to jump, rather than crawl, over the $50 billion milestone. The new law gives banks approaching that mark more room to buy other institutions without worrying about additional regulatory oversight.
Still, the deals regional banks have announced have mostly been for institutions that are a fraction of their size. Blockbuster deals between two regionals could be difficult to come by through the second half of the year.
“As you look at the list, there are not many lackluster performers. Therefore, there aren’t a lot of banks that should necessarily think they need to team up,” said Charles Crowley, a managing director at Boenning & Scattergood.
Here is a look at the seven biggest deals announced so far this year, all of which topped $500 million in value:
More regional banks could follow in the second half of the year after lawmakers lifted the systematically important financial institution threshold to $250 billion from $50 billion. (The change for institutions with less than $100 billion will go into effect shortly; those between $100 billion and $250 billion will have to wait on guidance from the Federal Reserve Board.)
Conventional wisdom has long been that institutions needed to jump, rather than crawl, over the $50 billion milestone. The new law gives banks approaching that mark more room to buy other institutions without worrying about additional regulatory oversight.
Still, the deals regional banks have announced have mostly been for institutions that are a fraction of their size. Blockbuster deals between two regionals could be difficult to come by through the second half of the year.
“As you look at the list, there are not many lackluster performers. Therefore, there aren’t a lot of banks that should necessarily think they need to team up,” said Charles Crowley, a managing director at Boenning & Scattergood.
Here is a look at the seven biggest deals announced so far this year, all of which topped $500 million in value:
Christopher Dilts/Bloomberg
BUYER: Fifth Third
SELLER: MB Financial
DEAL VALUE: $4.6 billion
ANNOUNCED: May 21
STATUS: Pending
Fifth Third had been looking for a way to bolster its operations in Chicago when it announced its nearly $5 billion deal to buy MB Financial last month. Themove allows management to focus organic growth efforts in other cities, such as Atlanta and Nashville.
Fifth Third’s executives spent a significant amount of time meeting with — including at least three dinners — and convincing MB’s team thatpartnering made strategic sense . This relationship helped Fifth Third beat out other suitors, including one that had offered MB more money.
It is thelargest bank acquisition since Royal Bank of Canada bought City National in 2015 and the first deal for Fifth third since 2008.
SELLER: MB Financial
DEAL VALUE: $4.6 billion
ANNOUNCED: May 21
STATUS: Pending
Fifth Third had been looking for a way to bolster its operations in Chicago when it announced its nearly $5 billion deal to buy MB Financial last month. The
Fifth Third’s executives spent a significant amount of time meeting with — including at least three dinners — and convincing MB’s team that
It is the
BUYER: Cadence Bancorp
SELLER: State Bank Financial
DEAL VALUE: $1.4 billion
ANNOUNCED: May 13
STATUS: Expected to close in the fourth quarter
Atlanta has been a hot market for bank M&A this year with five banks based there agreeing to sell. That includes Cadence Bancorp.’s roughly $1.4 billion deal to buy State Bank. Cadence CEO and Chairman Paul Murphy had long been interested in buying State. The two companiesspent years talking about a possible merger before finally pulling the trigger last month.
Once the deal closes, the $11 billion-asset Cadence will have more than100 branches, $12 billion in loans and $13 billion in deposits .
SELLER: State Bank Financial
DEAL VALUE: $1.4 billion
ANNOUNCED: May 13
STATUS: Expected to close in the fourth quarter
Atlanta has been a hot market for bank M&A this year with five banks based there agreeing to sell. That includes Cadence Bancorp.’s roughly $1.4 billion deal to buy State Bank. Cadence CEO and Chairman Paul Murphy had long been interested in buying State. The two companies
Once the deal closes, the $11 billion-asset Cadence will have more than
BUYER: Independent Bank Group
SELLER: Guaranty Bancorp
DEAL VALUE: $1 billion
ANNOUNCED: May 22
STATUS: Expected to close in the fourth quarter
David Brooks, the chairman and CEO of Independent Bank Group, had long insisted his company wasn’t interested in straying outside of its home market of Texas. But that changed last year after it bought another Texas bank with a small footprint in Colorado.
After some consideration, Independent decided to go all in on Colorado by paying $1 billion for Guaranty Bancorp in Denver. Management liked theeconomic outlook for areas such as Denver . With the deal, Independent’s loans in the state will jump from $400 million to $3.2 billion while deposits will increase from $278 million to more than $3 billion.
SELLER: Guaranty Bancorp
DEAL VALUE: $1 billion
ANNOUNCED: May 22
STATUS: Expected to close in the fourth quarter
David Brooks, the chairman and CEO of Independent Bank Group, had long insisted his company wasn’t interested in straying outside of its home market of Texas. But that changed last year after it bought another Texas bank with a small footprint in Colorado.
After some consideration, Independent decided to go all in on Colorado by paying $1 billion for Guaranty Bancorp in Denver. Management liked the
BUYER: BOK Financial
SELLER: CoBiz Financial
DEAL VALUE: $977 million
ANNOUNCED: June 18
STATUS: Expected to close in the fourth quarter
CoBiz Financial is another Denver-based bank that has been scooped up this year. BOK Financial built its financial projections for the $977 million deal around cost cutting but management is also hoping toboost fee income generated from CoBiz’s customers . The Tulsa, Okla., company is a powerhouse when it comes to noninterest income, earning around 40% of its revenue from fees.
The recent moving of the SIFI threshold allows the company to look at potentially even larger transactions, Steven Bradshaw, BOK's president and CEO, said during a conference call discussing the deal.
“It would have to check all the same boxes that CoBiz does in terms of really looking at infill for the most part, and be in a significant alignment especially from a credit perspective for us to find it attractive,” Bradshaw said. “But yes, I think it's reasonable to assume that we'll be looking at potential opportunities that might even be larger than this transaction.”
SELLER: CoBiz Financial
DEAL VALUE: $977 million
ANNOUNCED: June 18
STATUS: Expected to close in the fourth quarter
CoBiz Financial is another Denver-based bank that has been scooped up this year. BOK Financial built its financial projections for the $977 million deal around cost cutting but management is also hoping to
The recent moving of the SIFI threshold allows the company to look at potentially even larger transactions, Steven Bradshaw, BOK's president and CEO, said during a conference call discussing the deal.
“It would have to check all the same boxes that CoBiz does in terms of really looking at infill for the most part, and be in a significant alignment especially from a credit perspective for us to find it attractive,” Bradshaw said. “But yes, I think it's reasonable to assume that we'll be looking at potential opportunities that might even be larger than this transaction.”
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BUYER: CVB Financial
SELLER: Community Bank
DEAL VALUE: $878 million
ANNOUNCED: Feb. 26
STATUS: Expected to close in the third quarter
CVB Financial in Ontario, Calif., has landed the biggest deal on the West Coast so far this year,agreeing to buy Community Bank in Pasadena, Calif., for $878 million . CVB will pick up 16 branches, $2.7 billion in loans and $2.9 billion in deposits.
When the deal was announced in February, Christopher Myers, CVB’s president and chief executive, touted the combination as a way to add talent and enhance CVB's customer base. Community Bank would be CVB’s fifth bank acquisition since early 2009.
SELLER: Community Bank
DEAL VALUE: $878 million
ANNOUNCED: Feb. 26
STATUS: Expected to close in the third quarter
CVB Financial in Ontario, Calif., has landed the biggest deal on the West Coast so far this year,
When the deal was announced in February, Christopher Myers, CVB’s president and chief executive, touted the combination as a way to add talent and enhance CVB's customer base. Community Bank would be CVB’s fifth bank acquisition since early 2009.
BUYER: Pacific Premier Bancorp
SELLER: Grandpoint Capital
DEAL VALUE: $641 million
ANNOUNCED: Feb. 12
STATUS: Expected to close in the third quarter
Pacific Premier Bancorp in Irvine, Calif., will cross $10 billion of assets with itsdeal to buy Grandpoint Capital in Los Angeles. Expansion has been a long-term strategic focus for the $8.1 billion-asset Pacific Premier, management said. The company has been an active acquirer, buying six banks since the beginning of 2013 and adding more than $3 billion of assets through deals last year.
“Grandpoint is a highly attractive business banking franchise that we have known for many years and believe will be an excellent strategic and cultural fit with our existing franchise,” Steven Gardner, Pacific Premier’s chairman, president and CEO, said in the announcement of the deal.
SELLER: Grandpoint Capital
DEAL VALUE: $641 million
ANNOUNCED: Feb. 12
STATUS: Expected to close in the third quarter
Pacific Premier Bancorp in Irvine, Calif., will cross $10 billion of assets with its
“Grandpoint is a highly attractive business banking franchise that we have known for many years and believe will be an excellent strategic and cultural fit with our existing franchise,” Steven Gardner, Pacific Premier’s chairman, president and CEO, said in the announcement of the deal.
BUYER: People’s United Financial
SELLER: First Connecticut Bancorp
DEAL VALUE: $544 million
ANNOUNCED: June 19
STATUS: Expected to close in the fourth quarter
People’s United Financial is another regional bank that has announced a buyout deal since lawmakers lifted the SIFI threshold. Last week the $44 billion-assetcompany said it would pay $544 million for First Connecticut Bancorp, and it has indicated it's interested in pursuing other deals of similar size.
Jack Barnes, People’s United’s president and CEO, was confident that the deal would close by the end of the year given regulatory easing. Through meetings and discussions with regulators, it “is very clear that time frames in the application processes are being adhered to,” Barnes said during a conference call discussing the transaction.
SELLER: First Connecticut Bancorp
DEAL VALUE: $544 million
ANNOUNCED: June 19
STATUS: Expected to close in the fourth quarter
People’s United Financial is another regional bank that has announced a buyout deal since lawmakers lifted the SIFI threshold. Last week the $44 billion-asset
Jack Barnes, People’s United’s president and CEO, was confident that the deal would close by the end of the year given regulatory easing. Through meetings and discussions with regulators, it “is very clear that time frames in the application processes are being adhered to,” Barnes said during a conference call discussing the transaction.
