Bankers Slowly Warm to M&A
October 27, 2015 11:00 AM
Bank executives were pressed during third-quarter calls to share their views on whether to pursue acquisitions now that regulators have approved deals involving BB&T , Royal Bank of Canada and M&T Bank . Here's what many of them had to say.
U.S. Bancorp Takes Its Time
The Minneapolis company has been quiet on the bank M&A front for the last three years. CEO Richard Davis said acquisitions are unlikely next year, but "2017 probably becomes the time we will start looking at more traditional bank deals."
Playing It Low-Key
Beth Mooney, CEO of KeyCorp in Cleveland, told investors that regulators' approval of larger deals provides "an indication that there's more confidence or perhaps certainty" that such deals can close, which is "good for buyers and sellers alike." KeyCorp last year bought Pacific Crest Securities, a tech-focused investment bank, but Mooney did not say whether she plans to pursue more, or bigger, deals.
Bet on Bigger Deals
Bank of the Ozarks recently announced a large acquisition that will push it significantly over $10 billion in assets. CEO George Gleason said his company is now eyeing targets with up to $5 billion in assets. "Our tendency at this stage is to be looking at larger transactions," he said.
Get Real, Sellers!
Johnny Allison, chairman of Home Bancshares in Conway, Ark., said M&A "is both busy and frustrating" given seller's pricing expectations. "The bankers are brainwashed by a lot of these stupid prices being put in their head," he said during a quarterly call. "When we present a realistic price they think we're going to steal their baby."
Eager to Talk
BancorpSouth in Tupelo, Miss., seems eager to reach out to possible sellers after addressing a regulatory issue that forced it to delay two acquisitions. The company, which is expected to close those deals soon, knows it will have to convince potential sellers that it has solved its problems. "We're assuming that if we can get some conversations going and resolve whatever questions [surface tied to what] got us in timeout, we should be ready to move forward," said CEO Dan Rollins.
Multichatting
Small and midsize banks seem to be having more conversations about consolidation, said John Kanas, CEO of BankUnited in Miami Lakes, Fla. "There does seem to be more chatter these days," he said. "We are involved … in multiple conversations with multiple parties."
You Have to Consider It
Low rates mean that M&A must be on the table to create shareholder value, said First Horizon CEO Bryan Jordan. Revenue constraints, along with a need for technology investments, are creating "an environment where there are greater opportunities for M&A," he said.
Fee-Generators on My Radar
Associated Banc-Corp in Green Bay, Wis., is on the hunt for insurance agencies and other targets that could boost fee revenue , said CEO Philip Flynn. "I would guess our focus has probably shifted somewhat away from looking at bank opportunities," he said.
