Integrated Legacy Solutions (ILS), the leading provider of image and data conversion and migration technology today released its quarterly research on recent bank merger and acquisition data for the third quarter of 2017. Derived from data provided by the Federal Reserve System, the research quantifies all U.S. bank M&A activity occurring between July 2017 and September 2017 to monitor larger trends in the space, such as total mergers and acquisitions, activity by state and region, the asset sizes of acquired and acquiring banks and transaction pricing, among other insights.
The third quarter of 2017 saw 54 total bank mergers and acquisitions across the United States (down slightly from Q2), bringing the total number of M&A transactions up to 179 during the first three quarters of this year. The total year-to-date M&A activity continued to decrease, down 17% from 2016 and currently sits 18% below the five year average. The research also shows that the size of acquiring banks is diversifying. The median asset size of acquiring banks continues to decrease, dropping from an average of $1.7 billion in the first half of 2017 $920 million in Q32017, suggesting that smaller banks continue to play a key role in today’s mergers and acquisitions space.
Although the total number of acquisitions is down compared to 2016, as well as the five year average, overall deal price continues to steadily increase along with bank stocks. During the third quarter of 2017 alone, the industry saw a 14% increase in average deal price and a 41% increase in price compared to 2016Q3.
“As banks continue to factor M&A opportunities into their on-going business strategies, we’re seeing a definite shift in the overall activity, which is not necessarily a bad thing,” said Martin Webster, director of business development for ILS. “While we’re continuing to see a decline in the total number of acquisitions in comparison to years past, the M&A sector is very much still a viable portion of the banking industry as evident by continually increasing deal prices each quarter.”
Other notable insights from the 2017Q3 research include:
- The Mid-South FDIC region was the only district to experience a positive change in comparison to the third quarter of 2016, reporting a 33% increase as a result of 8 acquisitions.
- Georgia completed the most bank acquisitions in Q3 (5 total), led by the acquisition of $5 billion Nebraska-based credit card bank, The World’s Foremost Bank, by Columbus, Ga.-based Synovus Bank ($30 billion) and Capital One.
- Year-to-Date, the top acquiring states are Kansas (14), Illinois (11) and Wisconsin (10).
- The largest acquired bank in 2017Q3 was Missouri-based Scott Trade Bank, with $17 billion in assets. The bank was purchased by TD Bank in Delaware, which possessed $268.2 billion in assets.
- The price of M&A transactions is rising, which could account for the continued dip in total acquisitions this year. At the end of 2017Q3, the average was 1.74 times book, up from 1.13 times book from the third quarter of last year.
“Reviewing national M&A activity in comparison to last quarter or last year, it is easy to see that the industry is continuing to shift in the face of a rapidly evolving financial environment,” said Kris Bishop, president and founder of ILS. “Newly introduced regulatory, legislative and economic changes will most likely continue to impact the M&A space as we move forward, however, they will also result in banks taking a more strategic approach to mergers and acquisitions as they seek to diversify and grow their businesses.”