A widely held belief in banking circles is that, with so many financial institutions chasing so little business, the industry is poised for a major consolidation. That may well turn out to be true, but, so far, the ranks have thinned only slightly. According to SNL Financial LC, only 64 bank and thrift acquisitions were announced in the first half of this year, compared to 84 in the first six months of last year and 158 in 2007. The deals are far smaller, too. The average deal size year-to-date is just $15.4 million, compared to $327 million two years ago.
The surge of bank failures - dozens have failed so far this year with many more to follow - partly explains why M&A activity is so lackluster. Rather than shell out big bucks for healthy banks, many prospective acquirers are holding out hope that they can scoop up the deposits and branches of failed competitors on the cheap.