A preponderance of targets is not translating into a wealth of deals in some of the country's more troubled banking markets.
Experts say the issue is not just that an abundance of failed or weakened institutions is driving prices down, or that compliance concerns have the industry on pause. In some regions, it's a question of whether the banks that were supposed to step in as suitors can fill the role.
"There are a lot of banks with regulatory enforcement actions against them in the Southeast, which narrows the pool of eligible acquirers considerably," says Chip MacDonald, a partner the financial institutions practice at Jones Day.
The Southeast and West kept busy in the first half of 2011 with deals that were, for the most part, tiny. Excluding PNC's $3.5-billion buyout of Canadian-owned RBC Bank USA in North Carolina, transactions in the Southeast averaged $8.8 million apiece, versus an average $87 million in the comparably healthier mid-Atlantic region. Prices in the West averaged $9.5 million.
Only five transactions outside the Mid-Atlantic and New England regions topped $100 million, including PNC-RBC and Capital One 's $8.9 billion acquisition of ING Direct in Minnesota—the latter prodded more by European regulators than domestic market forces. Outside of ING, deals in the Midwest were small potatoes. No so in the Southwest. Even excluding the $790 million Comerica-Sterling and $137 million Iberiabank-Cameron Bancshares mergers, deals averaged $30 million.
