The resurgence in the bank M&A marketplace observed in April sustained in May as thirteen whole-bank transactions were announced over the course of the month, continuing a marked uptick in activity relative to 2023. Indeed, the aggregate deal count year-to-date through May 2024 was nearly 60% higher than in the same period last year.
As in May - which saw UMB agree to acquire HTLF and Wintrust agree to acquire Macatawa Bank - June similarly witnessed 2 transactions of notable size involving acquirers with assets above $30 billion: on May 10th, West Virginia-based United Bankshares, Inc. ($30.0 billion in assets; NASDAQ: “UBSI”) agreed to acquire Georgia-based Piedmont Bancorp, Inc. ($2.1 billion in assets) in an all-stock transaction valued at approximately $270 million. Meanwhile, on May 20th, Florida-based SouthState Corporation ($45.1 billion in assets; NYSE: “SSB”) agreed to acquire Texas-based Independent Bank Group, Inc. ($18.9 billion in assets; NASDAQ: “IBTX”) in an all-stock transaction valued at approximately $2 billion. Both transactions entail the entrance of each respective acquirer into a new state.
On the valuation front, deal pricing strengthened in May. The median price-to-tangible book value (“P/B”) multiple was 1.49x in May approximately 20% higher than both the prior month and the year-to-date median of 1.23x. The median price-to-earnings (“P/E”) multiple in May was 18.6x, largely in-line with the year-to-date median.
Challenging funding costs and compressing margins continue to influence M&A activity (and the broader banking landscape) in a variety of ways. We note that while the median yield on loans increased 38 bp in Q1 2024 relative to full-year 2023, the median cost of interest-bearing deposits increased 66 bp over the same period. By extension, the spread between median loan yields and median cost of interest bearing funds shrunk by almost 30 bp in Q1 2024 and, in fact, has declined by nearly 100 bp between 2021 and Q1 2024.
Finally, on May 16th Republic Bank of Arizona agreed to be acquired by Pima Federal Credit Union. Olsen Palmer advised the parent company of Republic Bank of Arizona in connection with this transaction.
For assistance with answering questions or if we can provide additional information, please feel free to contact us.
Contact: info@olsenpalmer.com