“The increase in transaction prices is likely a significant contributor to the declining volume of bank M&A activity that has occurred over the past year,” said Martin Webster, director of business development for ILS. “The decreasing number of community banks may also have something to do with the decline; as M&A activity peaked in 2015, there are fewer community banks, and thus, fewer opportunities to acquire.”
Other notable insights from the 2017 research include:
- The Atlanta and New England FDIC regions are the only areas of the country that have experienced M&A growth over the past five years, with Atlanta seeing a 13% increase and New England a 4% increase.
- The Southwest and San Francisco regions have experienced a significant decline in the number of completed transactions over the past five years, with the Southwest down 47% and the San Francisco region down 36% since 2013.
- The Chicago region had the most completed transactions in 2017 with 57 total transactions, followed by Atlanta with 49 transactions and Kansas City with 45 transactions.
- Kansas led the United States in total number of completed M&A transactions by state, with 18 completed transactions. Illinois was second with 16 completed transactions.
- Some of the most notable transactions included Kansas City, KS-based Security Bank, which merged 7 banks into one, and Winter Haven, FL-based CenterState Banks, Inc., which acquired four banks to become the largest community bank in the state.
- The average asset size of acquired banks has remained consistent over the last three years at approximately $750MM. The size of acquiring banks has fallen to around $5B over the past two years, compared to more than double that size in prior years.
“While overall M&A activity is down, we’re seeing new players emerge in the M&A landscape, such as acquirers with smaller asset sizes and banks in regions of the country that historically haven’t experienced as much activity,” said Kris Bishop, founder and president of ILS. “These developments attest to the overall health of M&A and suggest that it will remain a prominent growth strategy as we move farther into 2018 and beyond.”