Merger activity in the banking industry remained vibrant in November. Twenty whole-bank M&A transactions, representing approximately $2.5 billion in aggregate value, were announced over course of the month, keeping 2021 on-pace to see twice as many transactions as 2020.
A host of variables and market forces - some transient, some seemingly permanent – have converged to drive consolidation in 2021 and, likely, the years ahead. That said, while our outlook for the coming years entails elevated M&A activity, we note that industry-wide credit conditions are currently near-pristine and, somewhat counterintuitively, even improved in the aftermath of the onset of COVID. While we, like most, hope credit quality remains this sterling, we are reminded of the stubbornly cyclical nature of banking. Thus, an observation emerges that is especially applicable to potential sellers: current conditions are particularly favorable… but they may not remain so forever.
Transaction pricing was decidedly stable in November at least relative to the month prior: the median price-to-tangible book multiple of 1.57x was exactly identical to the median in October 2021. Over a broader period, the median price in full-year 2021 through November was 1.53x, just below the pre-COVID median notched in full-year 2019.
Finally, on November 22nd, Western States BanCorporation, Inc. agreed to be acquired by the parent of First National Bank of Omaha and on November 30th, Legacy Bank agreed to be acquired by InBankshares, Corp for total consideration of approximately $77.2 (party advised by Olsen Palmer indicated in bold). Olsen Palmer remains one of the top 3 bank M&A advisory firms nationwide according to S&P Global, as ranked by the total number of whole-bank M&A transactions advised upon since 2019.
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