I've been traveling on business this week and have missed posting the past couple of days, but I couldn't let the week end without commenting on a story in yesterday's American Banker, the tone, and much of the substance, of which, was that bank merger activity is stagnant and is not likely to improve in the near term. I'm not as gloomy.
Aside from the fact that our boutique firm is currently involved in a half-dozen deals, I attended a banking conference last Friday in Dallas (actually, the Four Seasons Resort in Las Colinas) hosted by Commerce Street Capital, in which that firm's head of M&A, former OTS Western Regional Director C.K. Lee, circulated some interesting statistics. One was that the total number of M&A transactions last year nation-wide was 230, the highest since 286 in 2007, before the crash. 39 of those were in the Southwest. In the first quarter of this year, there were 44 transactions, 8 of them in the Southwest. I was in Denver the last few days, and had lunch yesterday with an investment banker whose firm is heavily involved in M&A activity in Colorado and surrounding states, and he's also currently juggling a handful of deals at the moment.
While all of this is not exactly a raging inferno of M&A, it's not as depressing as the folks the American Banker interviewed made it out to be. There's no question that potential buyers who feasted on FDIC loss-sharing and the cheap prices they paid for failed banks are not enamored of sellers who want an actual premium over tangible book value. It's also true that, in some areas of the country, the bid/asked gap between sellers and buyers is wide. However, in some areas of the country, deals are getting done and there are more in the hopper.
Therefore, while I agree that the predictions of some pundits that there would be a "tsunami" of community bank consolidation this year will not prove to be true, I also think that as agencies like the CFPB continue to work their magic on the psyches of community bank owners, directors, and senior managers, and as the ownership of many closely-held community banking organizations continues to age, there will be more mice who decide that they no longer want the cheese, they just want out of the trap.
Then again, as Dennis Miller would put it, that's just my opinion. I could be wrong.