Ohio deal a rarity in slow year for bank M&A

Buckeye State Bancshares in Powell, Ohio, has agreed to acquire in-state peer Rockhold Bancshares — one of the few bank M&A deals so far this year.

The transaction is expected to close in the third quarter, subject to regulatory approvals and Rockhold shareholders' signoff. The move would expand the $320 million-asset Buckeye's footprint farther toward northeast Ohio. Rockhold is based in Bainbridge, not far from Cleveland.

Though the price was not disclosed and the deal involved two relatively small banks, it was significant as a rare M&A announcement in an otherwise quiet year for dealmaking.

M&A activity slowed in 2022 amid heightened regulatory scrutiny of acquisition plans and, later in the year, worries about a looming recession that could make it difficult for buyers to assess sellers' credit quality and value. The trend has continued into this year. 

Just six U.S. bank deals were announced in January, according to S&P Global Market Intelligence data. It was the weakest volume for any month since early 2020, when the pandemic put the brakes on nearly all types of transactions. The January figures also marked the slowest first month of a year since 2009, in the aftermath of the financial crisis.

"We anticipate one of the softest years for activity since" the financial crisis, "assuming the recession narrative grows in intensity," Raymond James analysts said in a recent report. 

However, the Raymond James team expects activity to accelerate once interest rates level off and economic uncertainties dissipate. That could potentially occur by the second half of 2023, they said.  

"We could see deal activity increase in the latter part of the year, assuming there is greater certainty on what a potential recession could look like (mild or more severe), which we should have greater clarity on in coming quarters," the analysts said.

At the close of 2022, Rockhold had $47.6 million of assets, $40.8 million of deposits and $29 million of loans.

"We are excited about this opportunity to blend our two community-focused organizations," Buckeye CEO Shawn Keller said in a press release. "As an employee-owned community bank, we are committed to the communities we serve and look forward to sharing our Buckeye-style of banking with Rockhold Bank clients."

Performance Trust Capital Partners was the financial adviser and Dinsmore & Shohl was the legal counsel to Buckeye. Janney Montgomery Scott was the financial adviser and Vorys Sater Seymour and Pease was the legal counsel to Rockhold.