SlideShare a Scribd company logo
1 of 3
Download to read offline
Bank Merger &
Acquisition Review
For Year 2011 & Q1 2012

M&A Activity in 2011
Despite an anticipated surge of transactions within the banking industry, bank merger and acquisition activity declined in
2011 compared to the prior year, hindered by a weak economic recovery, mounting regulatory pressures, and, according
to some analysts, excessive seller expectations. Deal volume excluding government assisted transactions decreased
15.8% in 2011 from 2010 levels and approximated 2008 levels. It appears deal volumes bottomed out in 2009 at a total
of 104 for the year. Unfortunately, the number of transactions not reporting a deal value has increased in recent periods
(from 39 in 2009 to 51 in 2011), making a comparison of trends in deal values difficult. The number of deals presented
is exclusive of FDIC-assisted transactions, which decreased to 92 in 2011 from 157 during 2010.

Deal value (for those transactions which reported it) totaled $6.8 billion in 2011 versus $11.7 billion in the prior year.
Total deal value included PNC’s $3.5 billion acquisition of RBC Bank, which was announced in the second quarter of
2011, completed in the first quarter of 2012, and represented 51% of total reported deal value in 2011. Comerica’s $1.0
billion acquisition of Sterling Bancshares (announced in the first quarter and completed in the third quarter) accounted
for 15% of total deal value during the year.

Notably, total deal value for transactions in 2010 included several sizeable acquisitions, such as BMO’s purchase of
Marshall & Ilsley Corporation ($5.8 billion), Hancock Holding Company’s purchase of Whitney Holding Corporation
($1.8 billion), and First Niagara Financial Group’s purchase of NewAlliance Bancshares, Inc. ($1.5 billion). The
following table provides additional perspective with regard to transaction activity in the banking industry since 2006.


                                                         M&A: 2006-2011

                                                         2006            2007        2008         2009          2010           2011
 Total Number of Deals (Excl. Gov’t Assisted)             234             243         128          104           177            123

 Total Deal Value (Millions): *                      $74,126        $67,779       $28,408       $1,321       $11,987         $6,761

 * Includes only those transactions for which deal value was reported


 Transactions not reporting deal value                     40              50          28           39            66             51


 Period-to-Period Change                                                06-’07     07-’08       08-’09        09-’10         ‘10-’11

 Number of Deals                                                         3.8%      -47.3%       -18.8%        70.2%          -30.5%




Mercer Capital’s ability to understand and            Andrew K. Gibbs, CFA, CPA/ABV              Jay D. Wilson, Jr., CFA
determine the value of a financial institution is     901.322.9726                               901.322.9725
the cornerstone of the firm’s services and has        gibbsa@mercercapital.com                   wilsonj@mercercapital.com
been its core expertise since its founding.               Connect on LinkedIn                       Connect on LinkedIn
As in 2010, the majority of acquisitions involved sellers with assets less than $500 million. As shown below, for deals
for which pricing multiples and deal value were available (a total of 72 transactions), 56 transactions, or more than 75%,
involved targets with assets less than $500 million.

                                                                   Asset target Size

                                                               Median                                                 Median
                                                                           Median        Median        Median
                                              Median           Price/                                                  Tang.            No. of         % of
                                                                           Price/        Price/        Price/
                                             Asset Size         LTM                                                 Prem/Core           Trans.        Trans.
                                                                            Book          TBV          Assets
                                                                EPS                                                  Deposits

    Assets < $500 Million                         $127,202       25.32        101.00         103.74       10.51             0.01             56         77.8%

    Assets $500 Million to $2 Billion             $714,973       23.32        121.34         121.34       11.27             3.65             12         16.7%

    Assets $2 Billion to $10 Billion          $2,616,014            NM        134.53         149.26       13.08             6.03                 3       4.2%

    Assets > $10 Billion                    $27,375,539             NM          87.46         97.29       12.60            -0.54                 1       1.4%



Twenty-one of the 72 transactions for which pricing information was available were all-cash transactions, 35 deals
involved some mixture of cash and other consideration (generally common stock), and 10 transactions involved common
stock as currency. The remaining deals were unclassified or not reported.

Regional economic viability again affected transaction volume during the year. Deal volume was highest in the Midwest
and West regions1, which reported 24 and 19, respectively, of the 72 total transactions with pricing multiples. The
Atlantic Coast and Northeast regions followed with 11 deals each in 2011. Seven transactions occurred in the Southeast
region. For comparison, FDIC-assisted transactions, which totaled 92 in 2011 compared to 157 in 2010, continued to
be concentrated in states with severely depressed real estate markets, such as Florida and Georgia (both in the Southeast
region), which had 13 and 23 bank failures, respectively, during 2011. Illinois and Colorado followed with 9 and 5
failures, respectively, and all remaining states reported less than 5 failures each during the year.

                                                                            REGION
                                                                                                                     Median
                                                   Median                                             Median
                              Median                              Median           Median                             Tang.             No. of
                                                  Price/LTM                                           Price/                                         % of Trans.
                             Asset Size                         Price/Book        Price/TBV                        Prem/Core            Trans.
                                                     EPS                                              Assets
                                                                                                                    Deposits
    Atlantic Coast              $247,009               16.39            77.69            81.25             6.92            -1.03             11           15.3%
    Midwest                       $72,594              19.21          114.07            118.76           11.32              2.64             24           33.3%
    Northeast                   $283,277               35.42          137.26            142.91           15.01              6.41             11           15.3%
    Southeast                   $116,160               14.55            63.72            63.72             3.07            -2.01                 7         9.7%
    West                        $186,970               33.64            91.79            91.79           10.61             -0.95             19           26.4%




1     The regions include the following states:
        ◉◉    Atlantic Coast – Delaware, Florida, Maryland, North Carolina, South Carolina, Virginia, West Virginia, Washington, D.C.
        ◉◉    Midwest – Iowa, Illinois, Indiana, Kansas, Michigan, Minnesota, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Texas, Wisconsin
        ◉◉    Northeast – Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont
        ◉◉    Southeast – Alabama, Arkansas, Georgia, Kentucky, Louisiana, Missouri, Mississippi, Tennessee
        ◉◉    West – Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming




© 2012 Mercer Capital                                                                    2                                                                 www.mercercapital.com
First Quarter 2012 Activity
 Through March of 2012, a total of 16 bank failures were reported with eight attributable to the Southeast region.
 Florida and Tennessee each reported two failures, while Georgia reported four, and Illinois reported three failures.
 For comparison, through March of 2012, transaction volume was higher with 56 total deals reported (compared to 47
 in the first quarter of 2011). Total reported deal value through the first quarter of 2012 was also higher at $3.0 billion
 (compared to $1.5 billion in the first quarter of 2011) and included Mitsubishi UFJ Financial Group’s $1.5 billion
 acquisition of Pacific Capital Bancorp as well as Prosperity Bancshares’ $529 million acquisition of American State
 Financial Corp. Deal volume in the first quarter of 2012 was weakest in the Northeast, where four transactions occurred,
 while deal volume was higher in the Midwest and Southeast, which reported 25 and 13 transactions, respectively.

 Some analysts have attributed the heightened transaction activity in the first quarter of 2012 to the improved economy
                                                                                                                                              BANK WATCH
 and an increased confidence among buyers, and, in particular, confidence with regard to loan portfolio assessment.
 Transaction activity going forward is expected to remain concentrated among smaller institutions in light of revenue
                                                                                                                                               Mercer Capital’s
 and regulatory challenges. However, uncertainty concerning regulatory changes and the resulting burdens placed on
                                                                                                                                                complimentary
 institutions (smaller ones in particular), coupled with market volatility and the heated political climate, still looms,
                                                                                                                                              monthly newsletter
 threatening any impending, potential surge of transaction activity.
                                                                                                                                               for bankers and
                                                                                                                                              those serving the
 Furthermore, capital raising remains difficult, and lackluster market activity caused many institutions to look to private
                                                                                                                                               banking industry
 equity firms as a source of capital in 2011. Preferred stock issuances were successful for several firms during the year,
 and some analysts expect more buyers to utilize such issuances to finance acquisitions when consolidation activity
 resumes.                                                                                                                                        Focusing on bank
                                                                                                                                                activity in five U.S.
                                                                                                                                              regions: Atlantic Coast,
                                                                                                                                                Midwest, Northeast,
                                                                                                                                               Southeast, and West
 About Mercer Capital
 The Financial Institutions Group of Mercer Capital provides a broad range of specialized advisory services to the financial services            View Archives
 industry. Mercer Capital assists financial institutions with significant corporate valuation, transactions, and other strategic decisions.
 Mercer Capital is one of the nation’s leading financial institutions valuation firms. In addition, the firm has a wealth of transaction
 experience helping clients with mergers, acquisitions, recapitalizations and other substantial transactions. Core services include:

  » Financial Institution Valuation                                    » M&A Representation & Consulting
  » Bank ESOP Valuation                                                » Fairness Opinions
  » Valuation for Tax Compliance                                       » Loan Portfolio Valuation
  » Goodwill Impairment Testing                                        » Capital Raising Consulting




Contact Us
                                                      Andrew K. Gibbs, CFA, CPA/ABV                       Jay D. Wilson, Jr., CFA
                                                      Leader, Financial Institutions Group                Vice President
  HEADQUARTERS                                        901.322.9726                                        901.322.9725
  5100 Poplar Avenue, Suite 2600                      gibbsa@mercercapital.com                            wilsonj@mercercapital.com
  Memphis, Tennessee 38137                                Connect on LinkedIn                                 Connect on LinkedIn
  901.685.2120 (p)
  901.685.2199 (f)
  www.mercercapital.com




 © 2012 Mercer Capital                                                                 3                                                       www.mercercapital.com

More Related Content

Viewers also liked

Merger and acquisition of BFIs in Nepal
Merger and acquisition of BFIs in NepalMerger and acquisition of BFIs in Nepal
Merger and acquisition of BFIs in NepalUjjwal Chand
 
Merger & acquisition
Merger & acquisitionMerger & acquisition
Merger & acquisitionVandana Insan
 
Social Media for Customer Acquisition For Banking Sector
Social Media for Customer Acquisition For Banking SectorSocial Media for Customer Acquisition For Banking Sector
Social Media for Customer Acquisition For Banking SectorDigital Vidya
 
Problems & prospects of merger and acquisition In Nepal
Problems & prospects of merger and acquisition In NepalProblems & prospects of merger and acquisition In Nepal
Problems & prospects of merger and acquisition In Nepalapichek
 
Merger and acquisition analysis
Merger and acquisition analysisMerger and acquisition analysis
Merger and acquisition analysisSudheer Parashar
 
Final Year Project Report Of Pgdm 6th Trimester
Final Year Project Report Of Pgdm 6th TrimesterFinal Year Project Report Of Pgdm 6th Trimester
Final Year Project Report Of Pgdm 6th Trimestertowardsgoal
 
Merger & Acquisition In Banks
Merger & Acquisition In BanksMerger & Acquisition In Banks
Merger & Acquisition In BanksRobin Kapoor
 
Tata corus mergers -----final
Tata corus mergers -----finalTata corus mergers -----final
Tata corus mergers -----finalJonty Mohta
 
Merger & acquisition, Hindalco Novelis
Merger & acquisition, Hindalco NovelisMerger & acquisition, Hindalco Novelis
Merger & acquisition, Hindalco NovelisGagan Pareek, PMP
 
MERGERS AND ACQUISITIONS IN INDIAN BANKING SECTOR
MERGERS AND ACQUISITIONS IN INDIAN BANKING SECTORMERGERS AND ACQUISITIONS IN INDIAN BANKING SECTOR
MERGERS AND ACQUISITIONS IN INDIAN BANKING SECTORRaku Daku
 
Merger & Acquisition of HDFC Bank with Centurian Bank of Punjab
Merger & Acquisition of HDFC Bank with Centurian Bank of PunjabMerger & Acquisition of HDFC Bank with Centurian Bank of Punjab
Merger & Acquisition of HDFC Bank with Centurian Bank of PunjabRohan Solanki
 
Merger and acquisition
Merger and acquisitionMerger and acquisition
Merger and acquisitionBhanu Negi
 
Merger and acquisition ppt
Merger and acquisition pptMerger and acquisition ppt
Merger and acquisition pptSwati Garg
 
MERGER,ACQUISITION AND CORPORATE RESTRUCTURING
MERGER,ACQUISITION AND CORPORATE RESTRUCTURINGMERGER,ACQUISITION AND CORPORATE RESTRUCTURING
MERGER,ACQUISITION AND CORPORATE RESTRUCTURINGAugustin Bangalore
 
Merger,Acquisition&Takeovers
Merger,Acquisition&TakeoversMerger,Acquisition&Takeovers
Merger,Acquisition&Takeoversamansingh09
 
Mergers and acquisitions
Mergers and acquisitionsMergers and acquisitions
Mergers and acquisitionsAnurag Savarnya
 

Viewers also liked (17)

Merger and acquisition of BFIs in Nepal
Merger and acquisition of BFIs in NepalMerger and acquisition of BFIs in Nepal
Merger and acquisition of BFIs in Nepal
 
Merger & acquisition
Merger & acquisitionMerger & acquisition
Merger & acquisition
 
Social Media for Customer Acquisition For Banking Sector
Social Media for Customer Acquisition For Banking SectorSocial Media for Customer Acquisition For Banking Sector
Social Media for Customer Acquisition For Banking Sector
 
Problems & prospects of merger and acquisition In Nepal
Problems & prospects of merger and acquisition In NepalProblems & prospects of merger and acquisition In Nepal
Problems & prospects of merger and acquisition In Nepal
 
Merger and acquisition analysis
Merger and acquisition analysisMerger and acquisition analysis
Merger and acquisition analysis
 
Final Year Project Report Of Pgdm 6th Trimester
Final Year Project Report Of Pgdm 6th TrimesterFinal Year Project Report Of Pgdm 6th Trimester
Final Year Project Report Of Pgdm 6th Trimester
 
Merger & Acquisition In Banks
Merger & Acquisition In BanksMerger & Acquisition In Banks
Merger & Acquisition In Banks
 
Tata corus mergers -----final
Tata corus mergers -----finalTata corus mergers -----final
Tata corus mergers -----final
 
Merger & acquisition, Hindalco Novelis
Merger & acquisition, Hindalco NovelisMerger & acquisition, Hindalco Novelis
Merger & acquisition, Hindalco Novelis
 
MERGERS AND ACQUISITIONS IN INDIAN BANKING SECTOR
MERGERS AND ACQUISITIONS IN INDIAN BANKING SECTORMERGERS AND ACQUISITIONS IN INDIAN BANKING SECTOR
MERGERS AND ACQUISITIONS IN INDIAN BANKING SECTOR
 
Merger & Acquisition of HDFC Bank with Centurian Bank of Punjab
Merger & Acquisition of HDFC Bank with Centurian Bank of PunjabMerger & Acquisition of HDFC Bank with Centurian Bank of Punjab
Merger & Acquisition of HDFC Bank with Centurian Bank of Punjab
 
Merger and acquisition
Merger and acquisitionMerger and acquisition
Merger and acquisition
 
Merger and acquisition ppt
Merger and acquisition pptMerger and acquisition ppt
Merger and acquisition ppt
 
MERGER,ACQUISITION AND CORPORATE RESTRUCTURING
MERGER,ACQUISITION AND CORPORATE RESTRUCTURINGMERGER,ACQUISITION AND CORPORATE RESTRUCTURING
MERGER,ACQUISITION AND CORPORATE RESTRUCTURING
 
Merger,Acquisition&Takeovers
Merger,Acquisition&TakeoversMerger,Acquisition&Takeovers
Merger,Acquisition&Takeovers
 
Mergers and acquisitions
Mergers and acquisitionsMergers and acquisitions
Mergers and acquisitions
 
Mergers and acquisitions
Mergers and acquisitionsMergers and acquisitions
Mergers and acquisitions
 

More from Mercer Capital

Mercer Capital's Bank Watch | September 2023 | The Interest Rate Environment ...
Mercer Capital's Bank Watch | September 2023 | The Interest Rate Environment ...Mercer Capital's Bank Watch | September 2023 | The Interest Rate Environment ...
Mercer Capital's Bank Watch | September 2023 | The Interest Rate Environment ...Mercer Capital
 
Mercer Capital's Investment Management Industry Newsletter | Q2 2023 | Focus:...
Mercer Capital's Investment Management Industry Newsletter | Q2 2023 | Focus:...Mercer Capital's Investment Management Industry Newsletter | Q2 2023 | Focus:...
Mercer Capital's Investment Management Industry Newsletter | Q2 2023 | Focus:...Mercer Capital
 
Mercer Capital's Bank Watch | July 2023 | Bank Impairment Testing
Mercer Capital's Bank Watch | July 2023 | Bank Impairment TestingMercer Capital's Bank Watch | July 2023 | Bank Impairment Testing
Mercer Capital's Bank Watch | July 2023 | Bank Impairment TestingMercer Capital
 
Mercer Capital's Value Focus: Transportation & Logistics | Q1 2023 |
Mercer Capital's Value Focus: Transportation & Logistics  | Q1 2023 |Mercer Capital's Value Focus: Transportation & Logistics  | Q1 2023 |
Mercer Capital's Value Focus: Transportation & Logistics | Q1 2023 |Mercer Capital
 
Mercer Capital's Value Focus: Auto Dealer Industry | Year-End 2023
Mercer Capital's Value Focus: Auto Dealer Industry | Year-End 2023Mercer Capital's Value Focus: Auto Dealer Industry | Year-End 2023
Mercer Capital's Value Focus: Auto Dealer Industry | Year-End 2023Mercer Capital
 
Mercer Capital's Value Matters™ | Issue No. 1, 2023
Mercer Capital's Value Matters™ | Issue No. 1, 2023  Mercer Capital's Value Matters™ | Issue No. 1, 2023
Mercer Capital's Value Matters™ | Issue No. 1, 2023 Mercer Capital
 
Mercer Capital - Corporate Finance in 30 Minutes Whitepaper.pdf
Mercer Capital - Corporate Finance in 30 Minutes Whitepaper.pdfMercer Capital - Corporate Finance in 30 Minutes Whitepaper.pdf
Mercer Capital - Corporate Finance in 30 Minutes Whitepaper.pdfMercer Capital
 
Mercer Capital's Bank Watch | March 2023 | “I’m Not Broke. I’m Just Not Liquid.”
Mercer Capital's Bank Watch | March 2023 | “I’m Not Broke. I’m Just Not Liquid.”Mercer Capital's Bank Watch | March 2023 | “I’m Not Broke. I’m Just Not Liquid.”
Mercer Capital's Bank Watch | March 2023 | “I’m Not Broke. I’m Just Not Liquid.”Mercer Capital
 
Mercer Capital's Middle Market Transaction Update | Spring 2023
Mercer Capital's Middle Market Transaction Update | Spring 2023Mercer Capital's Middle Market Transaction Update | Spring 2023
Mercer Capital's Middle Market Transaction Update | Spring 2023Mercer Capital
 
Mercer Capital's Bank Watch | February 2023 | Themes from Bank Director’s 202...
Mercer Capital's Bank Watch | February 2023 | Themes from Bank Director’s 202...Mercer Capital's Bank Watch | February 2023 | Themes from Bank Director’s 202...
Mercer Capital's Bank Watch | February 2023 | Themes from Bank Director’s 202...Mercer Capital
 
Mercer Capital's Investment Management Industry Newsletter | Q4 2023 | Focus:...
Mercer Capital's Investment Management Industry Newsletter | Q4 2023 | Focus:...Mercer Capital's Investment Management Industry Newsletter | Q4 2023 | Focus:...
Mercer Capital's Investment Management Industry Newsletter | Q4 2023 | Focus:...Mercer Capital
 
Mercer Capital's Value Focus: Exploration and Production | Fourth Quarter 202...
Mercer Capital's Value Focus: Exploration and Production | Fourth Quarter 202...Mercer Capital's Value Focus: Exploration and Production | Fourth Quarter 202...
Mercer Capital's Value Focus: Exploration and Production | Fourth Quarter 202...Mercer Capital
 
Mercer Capital's Middle Market Transaction Update | Winter 2022
Mercer Capital's Middle Market Transaction Update | Winter 2022Mercer Capital's Middle Market Transaction Update | Winter 2022
Mercer Capital's Middle Market Transaction Update | Winter 2022Mercer Capital
 
Mercer Capital's Bank Watch | December 2022 | Bank M&A 2022 - Turbulence
Mercer Capital's Bank Watch | December 2022 | Bank M&A 2022 - TurbulenceMercer Capital's Bank Watch | December 2022 | Bank M&A 2022 - Turbulence
Mercer Capital's Bank Watch | December 2022 | Bank M&A 2022 - TurbulenceMercer Capital
 
Mercer Capital's Value Matters™ | Issue No. 3, 2022|
Mercer Capital's Value Matters™ | Issue No. 3, 2022|Mercer Capital's Value Matters™ | Issue No. 3, 2022|
Mercer Capital's Value Matters™ | Issue No. 3, 2022|Mercer Capital
 
Mercer Capital's Value Focus: Transportation & Logistics | Q3 2022
Mercer Capital's Value Focus: Transportation & Logistics  | Q3 2022 Mercer Capital's Value Focus: Transportation & Logistics  | Q3 2022
Mercer Capital's Value Focus: Transportation & Logistics | Q3 2022 Mercer Capital
 
Mercer Capital's Bank Watch | November 2022 | Community Bank Loan Portfolios ...
Mercer Capital's Bank Watch | November 2022 | Community Bank Loan Portfolios ...Mercer Capital's Bank Watch | November 2022 | Community Bank Loan Portfolios ...
Mercer Capital's Bank Watch | November 2022 | Community Bank Loan Portfolios ...Mercer Capital
 
Mercer Capital's Investment Management Industry Newsletter | Q3 2022 | Focus:...
Mercer Capital's Investment Management Industry Newsletter | Q3 2022 | Focus:...Mercer Capital's Investment Management Industry Newsletter | Q3 2022 | Focus:...
Mercer Capital's Investment Management Industry Newsletter | Q3 2022 | Focus:...Mercer Capital
 
Mercer Capital's Investment Management Industry Newsletter | Q2 2022 | Segmen...
Mercer Capital's Investment Management Industry Newsletter | Q2 2022 | Segmen...Mercer Capital's Investment Management Industry Newsletter | Q2 2022 | Segmen...
Mercer Capital's Investment Management Industry Newsletter | Q2 2022 | Segmen...Mercer Capital
 
Mercer Capital's Bank Watch | October 2022 | How Are Tech-Forward Banks Perfo...
Mercer Capital's Bank Watch | October 2022 | How Are Tech-Forward Banks Perfo...Mercer Capital's Bank Watch | October 2022 | How Are Tech-Forward Banks Perfo...
Mercer Capital's Bank Watch | October 2022 | How Are Tech-Forward Banks Perfo...Mercer Capital
 

More from Mercer Capital (20)

Mercer Capital's Bank Watch | September 2023 | The Interest Rate Environment ...
Mercer Capital's Bank Watch | September 2023 | The Interest Rate Environment ...Mercer Capital's Bank Watch | September 2023 | The Interest Rate Environment ...
Mercer Capital's Bank Watch | September 2023 | The Interest Rate Environment ...
 
Mercer Capital's Investment Management Industry Newsletter | Q2 2023 | Focus:...
Mercer Capital's Investment Management Industry Newsletter | Q2 2023 | Focus:...Mercer Capital's Investment Management Industry Newsletter | Q2 2023 | Focus:...
Mercer Capital's Investment Management Industry Newsletter | Q2 2023 | Focus:...
 
Mercer Capital's Bank Watch | July 2023 | Bank Impairment Testing
Mercer Capital's Bank Watch | July 2023 | Bank Impairment TestingMercer Capital's Bank Watch | July 2023 | Bank Impairment Testing
Mercer Capital's Bank Watch | July 2023 | Bank Impairment Testing
 
Mercer Capital's Value Focus: Transportation & Logistics | Q1 2023 |
Mercer Capital's Value Focus: Transportation & Logistics  | Q1 2023 |Mercer Capital's Value Focus: Transportation & Logistics  | Q1 2023 |
Mercer Capital's Value Focus: Transportation & Logistics | Q1 2023 |
 
Mercer Capital's Value Focus: Auto Dealer Industry | Year-End 2023
Mercer Capital's Value Focus: Auto Dealer Industry | Year-End 2023Mercer Capital's Value Focus: Auto Dealer Industry | Year-End 2023
Mercer Capital's Value Focus: Auto Dealer Industry | Year-End 2023
 
Mercer Capital's Value Matters™ | Issue No. 1, 2023
Mercer Capital's Value Matters™ | Issue No. 1, 2023  Mercer Capital's Value Matters™ | Issue No. 1, 2023
Mercer Capital's Value Matters™ | Issue No. 1, 2023
 
Mercer Capital - Corporate Finance in 30 Minutes Whitepaper.pdf
Mercer Capital - Corporate Finance in 30 Minutes Whitepaper.pdfMercer Capital - Corporate Finance in 30 Minutes Whitepaper.pdf
Mercer Capital - Corporate Finance in 30 Minutes Whitepaper.pdf
 
Mercer Capital's Bank Watch | March 2023 | “I’m Not Broke. I’m Just Not Liquid.”
Mercer Capital's Bank Watch | March 2023 | “I’m Not Broke. I’m Just Not Liquid.”Mercer Capital's Bank Watch | March 2023 | “I’m Not Broke. I’m Just Not Liquid.”
Mercer Capital's Bank Watch | March 2023 | “I’m Not Broke. I’m Just Not Liquid.”
 
Mercer Capital's Middle Market Transaction Update | Spring 2023
Mercer Capital's Middle Market Transaction Update | Spring 2023Mercer Capital's Middle Market Transaction Update | Spring 2023
Mercer Capital's Middle Market Transaction Update | Spring 2023
 
Mercer Capital's Bank Watch | February 2023 | Themes from Bank Director’s 202...
Mercer Capital's Bank Watch | February 2023 | Themes from Bank Director’s 202...Mercer Capital's Bank Watch | February 2023 | Themes from Bank Director’s 202...
Mercer Capital's Bank Watch | February 2023 | Themes from Bank Director’s 202...
 
Mercer Capital's Investment Management Industry Newsletter | Q4 2023 | Focus:...
Mercer Capital's Investment Management Industry Newsletter | Q4 2023 | Focus:...Mercer Capital's Investment Management Industry Newsletter | Q4 2023 | Focus:...
Mercer Capital's Investment Management Industry Newsletter | Q4 2023 | Focus:...
 
Mercer Capital's Value Focus: Exploration and Production | Fourth Quarter 202...
Mercer Capital's Value Focus: Exploration and Production | Fourth Quarter 202...Mercer Capital's Value Focus: Exploration and Production | Fourth Quarter 202...
Mercer Capital's Value Focus: Exploration and Production | Fourth Quarter 202...
 
Mercer Capital's Middle Market Transaction Update | Winter 2022
Mercer Capital's Middle Market Transaction Update | Winter 2022Mercer Capital's Middle Market Transaction Update | Winter 2022
Mercer Capital's Middle Market Transaction Update | Winter 2022
 
Mercer Capital's Bank Watch | December 2022 | Bank M&A 2022 - Turbulence
Mercer Capital's Bank Watch | December 2022 | Bank M&A 2022 - TurbulenceMercer Capital's Bank Watch | December 2022 | Bank M&A 2022 - Turbulence
Mercer Capital's Bank Watch | December 2022 | Bank M&A 2022 - Turbulence
 
Mercer Capital's Value Matters™ | Issue No. 3, 2022|
Mercer Capital's Value Matters™ | Issue No. 3, 2022|Mercer Capital's Value Matters™ | Issue No. 3, 2022|
Mercer Capital's Value Matters™ | Issue No. 3, 2022|
 
Mercer Capital's Value Focus: Transportation & Logistics | Q3 2022
Mercer Capital's Value Focus: Transportation & Logistics  | Q3 2022 Mercer Capital's Value Focus: Transportation & Logistics  | Q3 2022
Mercer Capital's Value Focus: Transportation & Logistics | Q3 2022
 
Mercer Capital's Bank Watch | November 2022 | Community Bank Loan Portfolios ...
Mercer Capital's Bank Watch | November 2022 | Community Bank Loan Portfolios ...Mercer Capital's Bank Watch | November 2022 | Community Bank Loan Portfolios ...
Mercer Capital's Bank Watch | November 2022 | Community Bank Loan Portfolios ...
 
Mercer Capital's Investment Management Industry Newsletter | Q3 2022 | Focus:...
Mercer Capital's Investment Management Industry Newsletter | Q3 2022 | Focus:...Mercer Capital's Investment Management Industry Newsletter | Q3 2022 | Focus:...
Mercer Capital's Investment Management Industry Newsletter | Q3 2022 | Focus:...
 
Mercer Capital's Investment Management Industry Newsletter | Q2 2022 | Segmen...
Mercer Capital's Investment Management Industry Newsletter | Q2 2022 | Segmen...Mercer Capital's Investment Management Industry Newsletter | Q2 2022 | Segmen...
Mercer Capital's Investment Management Industry Newsletter | Q2 2022 | Segmen...
 
Mercer Capital's Bank Watch | October 2022 | How Are Tech-Forward Banks Perfo...
Mercer Capital's Bank Watch | October 2022 | How Are Tech-Forward Banks Perfo...Mercer Capital's Bank Watch | October 2022 | How Are Tech-Forward Banks Perfo...
Mercer Capital's Bank Watch | October 2022 | How Are Tech-Forward Banks Perfo...
 

Recently uploaded

Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...mwangimwangi222
 
MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.Arifa Saeed
 
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINTACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINTindexPub
 
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.KumarJayaraman3
 
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfLundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfAdnet Communications
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxPrecize Formely Leadoff
 
2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation2024.03 Strategic Resources Presentation
2024.03 Strategic Resources PresentationAdnet Communications
 
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESKumarJayaraman3
 
Hungarys economy made by Robert Miklos
Hungarys economy   made by Robert MiklosHungarys economy   made by Robert Miklos
Hungarys economy made by Robert Miklosbeduinpower135
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfMichael Silva
 
CLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdfCLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdfSCBEICSCB
 
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGeckoRWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGeckoCoinGecko
 
The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?Stephen Perrenod
 
India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023SkillCircle
 
Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Commonwealth
 
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAM
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAMZakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAM
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAMFaisal834049
 
Work and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingWork and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingHenry Tapper
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent PreferencesGRAPE
 

Recently uploaded (20)

E-levy and Merchant Payment Exemption in Ghana
E-levy and Merchant Payment Exemption in GhanaE-levy and Merchant Payment Exemption in Ghana
E-levy and Merchant Payment Exemption in Ghana
 
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...Solution manual for  Intermediate Accounting, 11th Edition by David Spiceland...
Solution manual for Intermediate Accounting, 11th Edition by David Spiceland...
 
MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.MARKET FAILURE SITUATION IN THE ECONOMY.
MARKET FAILURE SITUATION IN THE ECONOMY.
 
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINTACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
ACADEMIC BANK OF CREDIT: A WORLDWIDE VIEWPOINT
 
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
ACCOUNTING FOR BUSINESS.II DEPARTMENTAL ACCOUNTS.
 
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdfLundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
Lundin Gold March 2024 Corporate Presentation - PDAC v1.pdf
 
Buy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptxBuy and Sell Urban Tots unlisted shares.pptx
Buy and Sell Urban Tots unlisted shares.pptx
 
2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation2024.03 Strategic Resources Presentation
2024.03 Strategic Resources Presentation
 
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTESACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
ACCOUNTING FOR BUSINESS.II BRANCH ACCOUNTS NOTES
 
Hungarys economy made by Robert Miklos
Hungarys economy   made by Robert MiklosHungarys economy   made by Robert Miklos
Hungarys economy made by Robert Miklos
 
Stock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdfStock Market Brief Deck for 3/22/2024.pdf
Stock Market Brief Deck for 3/22/2024.pdf
 
CLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdfCLMV-Outlook-March-2024-ENG-20240327.pdf
CLMV-Outlook-March-2024-ENG-20240327.pdf
 
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGeckoRWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
RWA Report 2024: Rise of Real-World Assets in Crypto | CoinGecko
 
The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?The Power Laws of Bitcoin: How can an S-curve be a power law?
The Power Laws of Bitcoin: How can an S-curve be a power law?
 
India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023India Economic Survey Complete for the year of 2022 to 2023
India Economic Survey Complete for the year of 2022 to 2023
 
Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]Monthly Market Risk Update: March 2024 [SlideShare]
Monthly Market Risk Update: March 2024 [SlideShare]
 
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAM
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAMZakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAM
Zakat and it’s Social Benefits - THE FORGOTTEN PILLAR OF ISLAM
 
Work and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB fundingWork and Pensions report into UK corporate DB funding
Work and Pensions report into UK corporate DB funding
 
Contracts with Interdependent Preferences
Contracts with Interdependent PreferencesContracts with Interdependent Preferences
Contracts with Interdependent Preferences
 
Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024Monthly Economic Monitoring of Ukraine No.230, March 2024
Monthly Economic Monitoring of Ukraine No.230, March 2024
 

Bank Merger & Acquisition Review: 2011 & Q1 2012 | Mercer Capital

  • 1. Bank Merger & Acquisition Review For Year 2011 & Q1 2012 M&A Activity in 2011 Despite an anticipated surge of transactions within the banking industry, bank merger and acquisition activity declined in 2011 compared to the prior year, hindered by a weak economic recovery, mounting regulatory pressures, and, according to some analysts, excessive seller expectations. Deal volume excluding government assisted transactions decreased 15.8% in 2011 from 2010 levels and approximated 2008 levels. It appears deal volumes bottomed out in 2009 at a total of 104 for the year. Unfortunately, the number of transactions not reporting a deal value has increased in recent periods (from 39 in 2009 to 51 in 2011), making a comparison of trends in deal values difficult. The number of deals presented is exclusive of FDIC-assisted transactions, which decreased to 92 in 2011 from 157 during 2010. Deal value (for those transactions which reported it) totaled $6.8 billion in 2011 versus $11.7 billion in the prior year. Total deal value included PNC’s $3.5 billion acquisition of RBC Bank, which was announced in the second quarter of 2011, completed in the first quarter of 2012, and represented 51% of total reported deal value in 2011. Comerica’s $1.0 billion acquisition of Sterling Bancshares (announced in the first quarter and completed in the third quarter) accounted for 15% of total deal value during the year. Notably, total deal value for transactions in 2010 included several sizeable acquisitions, such as BMO’s purchase of Marshall & Ilsley Corporation ($5.8 billion), Hancock Holding Company’s purchase of Whitney Holding Corporation ($1.8 billion), and First Niagara Financial Group’s purchase of NewAlliance Bancshares, Inc. ($1.5 billion). The following table provides additional perspective with regard to transaction activity in the banking industry since 2006. M&A: 2006-2011 2006 2007 2008 2009 2010 2011 Total Number of Deals (Excl. Gov’t Assisted) 234 243 128 104 177 123 Total Deal Value (Millions): * $74,126 $67,779 $28,408 $1,321 $11,987 $6,761 * Includes only those transactions for which deal value was reported Transactions not reporting deal value 40 50 28 39 66 51 Period-to-Period Change 06-’07 07-’08 08-’09 09-’10 ‘10-’11 Number of Deals 3.8% -47.3% -18.8% 70.2% -30.5% Mercer Capital’s ability to understand and Andrew K. Gibbs, CFA, CPA/ABV Jay D. Wilson, Jr., CFA determine the value of a financial institution is 901.322.9726 901.322.9725 the cornerstone of the firm’s services and has gibbsa@mercercapital.com wilsonj@mercercapital.com been its core expertise since its founding. Connect on LinkedIn Connect on LinkedIn
  • 2. As in 2010, the majority of acquisitions involved sellers with assets less than $500 million. As shown below, for deals for which pricing multiples and deal value were available (a total of 72 transactions), 56 transactions, or more than 75%, involved targets with assets less than $500 million. Asset target Size Median Median Median Median Median Median Price/ Tang. No. of % of Price/ Price/ Price/ Asset Size LTM Prem/Core Trans. Trans. Book TBV Assets EPS Deposits Assets < $500 Million $127,202 25.32 101.00 103.74 10.51 0.01 56 77.8% Assets $500 Million to $2 Billion $714,973 23.32 121.34 121.34 11.27 3.65 12 16.7% Assets $2 Billion to $10 Billion $2,616,014 NM 134.53 149.26 13.08 6.03 3 4.2% Assets > $10 Billion $27,375,539 NM 87.46 97.29 12.60 -0.54 1 1.4% Twenty-one of the 72 transactions for which pricing information was available were all-cash transactions, 35 deals involved some mixture of cash and other consideration (generally common stock), and 10 transactions involved common stock as currency. The remaining deals were unclassified or not reported. Regional economic viability again affected transaction volume during the year. Deal volume was highest in the Midwest and West regions1, which reported 24 and 19, respectively, of the 72 total transactions with pricing multiples. The Atlantic Coast and Northeast regions followed with 11 deals each in 2011. Seven transactions occurred in the Southeast region. For comparison, FDIC-assisted transactions, which totaled 92 in 2011 compared to 157 in 2010, continued to be concentrated in states with severely depressed real estate markets, such as Florida and Georgia (both in the Southeast region), which had 13 and 23 bank failures, respectively, during 2011. Illinois and Colorado followed with 9 and 5 failures, respectively, and all remaining states reported less than 5 failures each during the year. REGION Median Median Median Median Median Median Tang. No. of Price/LTM Price/ % of Trans. Asset Size Price/Book Price/TBV Prem/Core Trans. EPS Assets Deposits Atlantic Coast $247,009 16.39 77.69 81.25 6.92 -1.03 11 15.3% Midwest $72,594 19.21 114.07 118.76 11.32 2.64 24 33.3% Northeast $283,277 35.42 137.26 142.91 15.01 6.41 11 15.3% Southeast $116,160 14.55 63.72 63.72 3.07 -2.01 7 9.7% West $186,970 33.64 91.79 91.79 10.61 -0.95 19 26.4% 1 The regions include the following states: ◉◉ Atlantic Coast – Delaware, Florida, Maryland, North Carolina, South Carolina, Virginia, West Virginia, Washington, D.C. ◉◉ Midwest – Iowa, Illinois, Indiana, Kansas, Michigan, Minnesota, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Texas, Wisconsin ◉◉ Northeast – Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont ◉◉ Southeast – Alabama, Arkansas, Georgia, Kentucky, Louisiana, Missouri, Mississippi, Tennessee ◉◉ West – Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming © 2012 Mercer Capital 2 www.mercercapital.com
  • 3. First Quarter 2012 Activity Through March of 2012, a total of 16 bank failures were reported with eight attributable to the Southeast region. Florida and Tennessee each reported two failures, while Georgia reported four, and Illinois reported three failures. For comparison, through March of 2012, transaction volume was higher with 56 total deals reported (compared to 47 in the first quarter of 2011). Total reported deal value through the first quarter of 2012 was also higher at $3.0 billion (compared to $1.5 billion in the first quarter of 2011) and included Mitsubishi UFJ Financial Group’s $1.5 billion acquisition of Pacific Capital Bancorp as well as Prosperity Bancshares’ $529 million acquisition of American State Financial Corp. Deal volume in the first quarter of 2012 was weakest in the Northeast, where four transactions occurred, while deal volume was higher in the Midwest and Southeast, which reported 25 and 13 transactions, respectively. Some analysts have attributed the heightened transaction activity in the first quarter of 2012 to the improved economy BANK WATCH and an increased confidence among buyers, and, in particular, confidence with regard to loan portfolio assessment. Transaction activity going forward is expected to remain concentrated among smaller institutions in light of revenue Mercer Capital’s and regulatory challenges. However, uncertainty concerning regulatory changes and the resulting burdens placed on complimentary institutions (smaller ones in particular), coupled with market volatility and the heated political climate, still looms, monthly newsletter threatening any impending, potential surge of transaction activity. for bankers and those serving the Furthermore, capital raising remains difficult, and lackluster market activity caused many institutions to look to private banking industry equity firms as a source of capital in 2011. Preferred stock issuances were successful for several firms during the year, and some analysts expect more buyers to utilize such issuances to finance acquisitions when consolidation activity resumes. Focusing on bank activity in five U.S. regions: Atlantic Coast, Midwest, Northeast, Southeast, and West About Mercer Capital The Financial Institutions Group of Mercer Capital provides a broad range of specialized advisory services to the financial services View Archives industry. Mercer Capital assists financial institutions with significant corporate valuation, transactions, and other strategic decisions. Mercer Capital is one of the nation’s leading financial institutions valuation firms. In addition, the firm has a wealth of transaction experience helping clients with mergers, acquisitions, recapitalizations and other substantial transactions. Core services include: » Financial Institution Valuation » M&A Representation & Consulting » Bank ESOP Valuation » Fairness Opinions » Valuation for Tax Compliance » Loan Portfolio Valuation » Goodwill Impairment Testing » Capital Raising Consulting Contact Us Andrew K. Gibbs, CFA, CPA/ABV Jay D. Wilson, Jr., CFA Leader, Financial Institutions Group Vice President HEADQUARTERS 901.322.9726 901.322.9725 5100 Poplar Avenue, Suite 2600 gibbsa@mercercapital.com wilsonj@mercercapital.com Memphis, Tennessee 38137 Connect on LinkedIn Connect on LinkedIn 901.685.2120 (p) 901.685.2199 (f) www.mercercapital.com © 2012 Mercer Capital 3 www.mercercapital.com