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Christopher Menkin
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Christopher "Kit" Menkin is of editor LeasingNews.org (http://www.leasingnews.org/), an internet trade publication for the finance/leasing industry. He has 41 years experience in the finance/leasing industry as well as being a founder of a commercial regional bank and serving on... More
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  • Bank M&A Q1 Scoreboard: Momentum Is Back 2 comments
    May 1, 2012 2:36 PM

    By Harish Mali
    SNL Financial

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    Amid the slowdown in FDIC-assisted failed bank transactions, the traditional bank M&A market has regained energy in the first quarter, according to SNL Financial data.

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    There were 50 whole bank and thrift deals announced in the first quarter aggregating to more than $3 billion, which is more than 3.5x the total value of deals announced in the preceding two quarters. Not only have the volume and number of deals picked up, but pricing has also improved. The average price to tangible book value of deals announced in the first quarter was 125.7%, the highest level of the last seven quarters. The total assets and deposits involved in the first quarter's bank and thrift deals amounted to $22.4 billion and $18.0 billion, respectively.

    Branch deals have also surged in popularity with 25 transactions announced in the first quarter. A total of 174 branches and $5.5 billion deposits were transferred, compared to 41 branches and $1.3 billion deposits transferred in the preceding quarter. There were only 18 branch deals announced in the year-ago quarter, involving 41 branches and $836.3 million in deposits.

    With the consolidation pace picking up, government-assisted transactions have fallen in the first quarter, as only 14 failed banks and thrifts were taken over in government-assisted transactions, compared to 24 such failures in the first quarter of 2011.

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    Among all deal types in the first quarter, six buyers were the most active with two acquisitions each. One of them was Davenport, Fla.-based CenterState Banks Inc. It assumed control of two failed banks, Belleview, Fla.-based Central Florida State Bank and Jacksonville, Fla.-based First Guaranty B&TC Co. of Jacksonville in January. First Guaranty Bank was its sixth purchase from the FDIC since 2009.

    Another acquisitive company was Houston-based Prosperity Bancshares Inc., which agreed to acquire Lubbock, Texas-based American State Financial Corp. for $529.2 million, the second largest deal announced in the quarter. The target had more than $3.1 billion in total assets and $2.5 billion in deposits as of Dec. 31, 2011.

    The largest deal of the quarter was the proposed acquisition of Santa Barbara, Calif.-based Pacific Capital Bancorp by Tokyo-based Mitsubishi UFJ Financial Group Inc. for $1.5 billion. It is the third largest deal announced in last twelve months after the sales of Wilmington, Del.-based ING Bank FSB and Raleigh, N.C.-based RBC Bank (NYSE:USA) last year.

    With 36 deals in total, the Midwest remained in the news in the first three months of 2012. The region witnessed 19 whole bank/thrift deals, 12 branch deals and five government-assisted deals. It is followed by the Southeast with 20 deals including eight whole bank/thrift, four branch and eight government-assisted deals.

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    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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Comments (2)
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  • Westcoaster
    , contributor
    Comments (582) | Send Message
     
    Great post and great news.

     

    Do you have any idea if most of these deals are stock for stock deals?

     

    I imagine if the acquiring banks book value is much greater then this makes sense, if not, what a time to be buying some of these banks with cash. If the acquiring bank's stock is beat up and they have the cash this is should be the cheapest time to buy, right now.

     

    I say once the broader market picks up on this share prices move up and the deals would have to go back to being stock for stock.

     

    In a mixed world with still high loan run off consolidation, expense reduction should be rewarded. How else can these mid-size banks grow profits so quickly?
    2 May 2012, 09:13 PM Reply Like
  • Christopher Menkin
    , contributor
    Comments (75) | Send Message
     
    Author’s reply » Mostly cash....Banks have a lot of cash. Some of it from TARP,
    used in the purchase. Rates are low and yields as low, too,
    so expanding in this manner is very smart business.
    3 May 2012, 11:37 AM Reply Like
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