Top bank M&A deals of 2017

December 26, 2017 12:01 PM

Secretary sends the merger document to the manager. selective focus.

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Bank M&A started off 2017 with a bang, with eight of the year’s 10 biggest deals taking place in the first six months. Volume picked up after that, mostly due to smaller mergers.

The total number of deals announced in 2017 has topped the prior year by about 6%, with 252 acquisitions, based on data from Keefe, Bruyette & Woods and S&P Global Market Intelligence. Average deal sizes and premiums also rose, generating some optimism among industry experts that momentum could continue into 2018.

“The environment right now trends toward [more] banks getting together,” Jonathan Hightower, a lawyer at Bryan Cave in Atlanta, said earlier this month. “We have a lot of different complimentary strengths across the banking landscape right now.”

North Carolina, where many local banks were backed by private equity after the financial crisis, was a hot market for consolidation. Three of the year’s biggest acquisitions involved sellers in the Tarheel State as out-of-state buyers were drawn to a growing population and ample opportunities for commercial lending. North Carolina has lost more than a third of its banks since the end of 2010.

Florida accounted for three of the other top deals, with each of those acquisitions having buyers that were based outside the state. The Sunshine State is well-known for boom-and-bust cycles that have tripped up banks unfamiliar with these risks in the past.

Sellers in California, Indiana, New York and Virginia accounted for the other big deals.

Here is a breakdown of the biggest bank acquisitions of 2017.

BUYER: Sterling Bancorp
SELLER: Astoria Financial
DEAL VALUE: $2.2 billion
ANNOUNCED: March 7
STATUS: Completed in October

Jack Kopnisky, the president and CEO of Sterling Bancorp in Montebello, N.Y., accomplished what New York Community Bancorp failed to do when he bought Astoria Financial in Lake Success, N.Y., for $2.2 billion. Astoria had agreed to be sold to New York Community, but that transaction fell apart for unknown reasons, though some have speculated that regulatory delays may have been tied to commercial real estate concentrations or that the deal would have made New York Community a systemically important financial institution. This year’s biggest bank acquisition nearly doubled Sterling's size to $31 billion of assets. The company also gained low-cost deposits and a large presence on Long Island.

BUYER: First Horizon Financial
SELLER: Capital Bank Financial
DEAL VALUE: $2.2 billion
ANNOUNCED: May 4
STATUS: Completed in November

First Horizon, led by Chairman and CEO Bryan Jordan, had gone more than two years without a whole-bank deal when it agreed to buy Capital Bank in Charlotte, N.C. It was the largest acquisition in the Memphis, Tenn., company’s history. Management at the $40 billion-asset First Horizon is optimistic about the deal, recently increasing cost-cutting expectations.

Terry Turner, Pinnacle Financial Partners

BUYER: Pinnacle Financial Partners
SELLER: BNC Bancorp
DEAL VALUE: $1.8 billion
ANNOUNCED: Jan. 22
STATUS: Completed in June

Pinnacle in Nashvillle, Tenn., also announced a big deal in North Carolina, agreeing to buy BNC Bancorp in High Point. The $21.7 billion-asset Pinnacle, which had only operated branches in Tennessee, began 2017 with a list of nine Southeastern markets it wanted to enter, including Charlotte and Raleigh in North Carolina and Charleston, S.C. BNC got them into six. Terry Turner, Pinnacle’s president and CEO, says his company’s service and lack of bureaucracy will help it make a name for itself in its new markets.

BUYER: Iberiabank
SELLER: Sabadell United Bank
DEAL VALUE: $1 billion
ANNOUNCED: Feb. 28
STATUS: Completed in July

Iberiabank in Lafayette, La., is betting that Florida’s attractive demographics will outweigh the risks of its boom-and-bust cycles. The $28 billion-asset company’s acquisition of Sabadell United more than doubled the size of its Florida operations, largely around Miami. Daryl Byrd, the company’s president and CEO, followed that deal up by agreeing to buy Gibraltar Private Bank & Trust for $223 million in; that deal should close early next year.

BUYER: First Financial Bancorp
SELLER: MainSource Financial Group
DEAL VALUE: $1 billion
ANNOUNCED: July 25
STATUS: Expected to close early next year

First Financial in Cincinnati will cross over $10 billion in assets when it buys MainSource in Greensburg, Ind. The deal also came with a twist; Archie Brown Jr., who runs the $4.6 billion-asset MainSource, is to become First Financial’s president and CEO. Claude Davis (pictured), the $8.8 billion-asset First Financial’s CEO, would become executive chairman. Though Brown didn’t insist on taking the top job, MainSource’s board was comfortable staying independent and this structure “really resolved the social issues,” Brown said when the deal was announced.

BUYER: Valley National Bancorp
SELLER: USAmeriBancorp
DEAL VALUE: $816 million
ANNOUNCED: July 26
STATUS: Expected to close Jan. 1

Gerald Lipkin, longtime chairman and CEO of Valley National Bancorp in Wayne, N.J., is ending his tenure on a high note. In July, the $24 billion-asset Valley announced the biggest deal in its history, for USAmeriBancorp. About three months later, Lipkin (pictured) said he would soon retire; Ira Robbins, president of Valley’s bank, is set to become CEO. Lipkin will remain chairman but not take an active role in the bank’s daily operations.

BUYER: Home BancShares
SELLER: Stonegate Bank
DEAL VALUE: $778 million
ANNOUNCED: March 27
STATUS: Completed in September

Johnny Allison, chairman of Home BancShares in Conway, Ark., finally landed his “dream deal” with the purchase of Stonegate in Pompano Beach, Fla. Allison said he had feared another bank would snap up Stonegate, which would have left him feeling “extremely disappointed for the rest of my life.” Allison, who has faced questions about bulking up in Florida, given the potential for a slowdown, defended the decision, noting that he was keeping an eye out for signs of trouble.

BUYER: PacWest Bancorp
SELLER: CU Bancorp
DEAL VALUE: $716 million
ANNOUNCED: March 27
STATUS: Completed in October

Matt Wagner, CEO of PacWest in Los Angeles, overcame protests from community activists to buy CU Bancorp, which is also based in Los Angeles. The California Reinvestment Coalition sent a letter to regulators arguing that the deal would fail to meet the convenience and needs of their communities. However, the $22 billion-asset PacWest secured regulatory approval in early October.

BUYER: Union Bankshares
SELLER: Xenith Bankshares
DEAL VALUE: $701 million
ANNOUNCED: May 22
STATUS: Expected to close in early January

John Asbury, president and CEO of Union in Richmond, Va., is determined not to repeat past mistakes when he integrates deal for Xenith. After Union bought StellarOne in 2014, roughly a dozen commercial lenders left, stunting loan growth. With Xenith, Asbury has focused on communication with employees, including a video in which he and T. Gaylon Layfield III, Xenith’s CEO, candidly discussed the partnership.

Jeff Amberg

BUYER: South State
SELLER: Park Sterling
DEAL VALUE: $691 million
ANNOUNCED: April 27
STATUS: Completed in November

The purchase of Park Sterling in Charlotte, N.C., was a major acquisition for South State in Columbia, S.C.. The historically acquisitive South State swelled to $14 billion in assets and added more than 50 branches in Georgia, Virginia and the Carolinas. When the deal was announced, Robert Hill Jr., South State’s CEO, said the partnership was a “natural next step” because the institutions had a “common vision for building a quality regional bank in the Southeast.”