A number of well-heeled bank acquirers are preparing to pounce.
In recent weeks, at least three serial buyers positioned themselves to strike should the right opportunity arise.
Wintrust Financial (WTFC) raised convertible preferred stock earlier this month, while Iberiabank (IBKC) and SCBT Financial (SCBT) filed shelf registration statements with the Securities and Exchange Commission that would allow them to quickly raise capital.
The moves, industry observers say, could be good indicators of a groundswell of merger-and-acquisition activity for the balance of this year. These already busy acquirers just want to be sure they are well suited to ride the wave.
“It is an encouraging signal that they want to be able to build their war chest so they can execute quickly and with some flexibility,” says Jeff Adams, a managing director at Carson Medlin, a division of Monroe Securities.
“Several of the banks that we view as logical acquirers have expressed opinions that M&A is going to pick up by the end of the year,” Adams adds. “I interpret that as them saying they expect to be doing deals by the end of year.”
Iberiabank, SCBT and Wintrust are among a small group of banks that have been willing to do open-bank acquisitions.
The $4.5 billion-asset SCBT, in Columbia, S.C., on Friday filed a shelf registration to raise up to $300 million, a year after bringing in $34.7 million from a private placement. Calls to SCBT were not returned, but the company is set to close next quarter on its purchase of the $546 million-asset Peoples Bancorp. in Easley, S.C. SCBT said in its filing that it is pursuing a growth strategy complemented with bank purchases.
Kenneth James, an analyst at Sterne Agee & Leach, says the filing reaffirms SCBT’s image as an acquirer.
“I don’t think you need the shelf to think of them as a buyer. They’ve done three failed bank deals and one traditional one,” James says. “This could be a sign that they are thinking, ‘hey, we’ve got a lot of opportunities’. Nothing is probably imminent, but they want to be ready. It is a good thing to have.”
The $15 billion-asset Wintrust, which acquired one bank without assistance last year and has struck several deals to buy failed banks and ancillary lines of business, raised $126.5 million by selling convertible preferred stock.
Edward Wehmer, Wintrust’s president and chief executive, has been particularly bullish in discussing his desire to buy; he says he visits at least one target a week. Wehmer says the logjam might be breaking. Sellers are getting more realistic about the value of their institutions or the institution’s credit has improved, but directors are fatigued.
“As time goes on, some of the banks are getting healthier. They are taking their losses and liquidating their problems and time is on their side,” Wehmer says. “But there are a lot of guys that just want to get out of the business. They’ve gone through hell and don’t want to hear how management now plans to grow.”
While SCBT and Iberiabank filed shelf registrations, Wehmer said Wintrust chose to raise the capital as convertible preferred to eliminate the worry of the unknown.
