Bank Director Releases 2020 M&A Survey Findings
The 2020 Bank M&A Survey digs into the core components of a successful transaction.
BRENTWOOD, Tenn., Nov. 12, 2019 /PRNewswire/ -- Bank Director, the leading information resource for directors and officers of financial institutions nationwide, today released its 2020 Bank M&A Survey, sponsored by Crowe LLP. Findings released state that the old adage remains true: Banks aren't bought. They're sold.
"While acquisition drivers remain much the same, the barriers to completing a deal have shifted over the past five years," says Emily McCormick, vice president of research at Bank Director. "Bank leaders have frequently bemoaned high price expectations on the part of the seller as a deal barrier in past surveys, but a rising percentage say there is a lack of suitable targets in markets they are in or want to enter."
Compared to last year's survey, banks are still seeking the same components in a target. Deposits remain highly prized; 67% say the target's deposit base is highly important in their decision to pull the trigger on an acquisition. And deposits are fueling acquisition activity: 60% seek to acquire an attractive deposit base. More than half want to increase earnings per share.
"Banks are beginning to focus once again on earnings impact from transactions. Despite all the various bank M&A metrics, at the end of the day, earnings are what drive the ultimate price and are the ultimate arbiter of deal 'goodness,'" says Rick Childs, partner at Crowe.
Key findings from the survey include:
Deal Pricing Trends
Despite concerns about high prices, 58% believe that the prices paid for targets in the banking industry are reasonable. Almost half anticipate that pricing will decrease in 2020; 37% predict that pricing will remain steady.
Fewer Deals Predicted
More than half say less than 200 bank transactions will be announced in 2020. Twenty percent believe there will be no more than 225. That will represent a continued decline in deals: 275 were completed in 2018; 222 were completed in 2019, through October 30, according to data from S&P Global Market Intelligence.
Economic Expectations Dampened
While more than half expect the U.S. economy to experience modest growth, that represents an almost 20-point decrease from the survey a year ago. And no bank leader predicts significant growth for the U.S. economy, compared to 14% last year. Meanwhile, more believe the U.S. economy will remain flat (21% in the 2020 survey, versus 3% last year) or even experience a downturn (22% this year, compared to 7% a year ago).
Modest Confidence in Selling
More than half of respondents believe it would be easy to find a buyer for their bank at a price the board would consider. However, that represents a 14-point decrease from last year's survey, and an increasing percentage — 27% versus 11% last year — believe it would not be easy to attract a buyer.
The survey, which was conducted in late August and September 2019, includes the views of more than 200 independent directors, chief executive officers and other senior executives of U.S. banks about acquisition and growth trends. Full survey results are now available online at BankDirector.com and will be featured in the 1st quarter 2020 issue of Bank Director magazine.
About Bank Director
Since 1991, Bank Director has served as a leading information resource for the directors and officers of financial institutions. Through Bank Director magazine, executive-level research, annual conferences and its website, BankDirector.com, Bank Director reaches the leaders of the institutions that comprise America's banking industry. Bank Director is headquartered in Brentwood, Tennessee. For more information, please visit BankDirector.com.
About Crowe LLP
Crowe LLP (www.crowe.com) is a public accounting, consulting and technology firm with offices around the world. Crowe uses its deep industry expertise to provide audit services to public and private entities. The firm and its subsidiaries also help clients make smart decisions that lead to lasting value with its tax, advisory, risk and performance services. Crowe is recognized by many organizations as one of the best places to work in the U.S. As an independent member of Crowe Global, one of the largest global accounting networks in the world, Crowe serves clients worldwide. The network consists of more than 200 independent accounting and advisory services firms in more than 130 countries around the world.
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For more information, please contact Bank Director's Chief Marketing Officer, Michelle King at [email protected].
SOURCE BankDirector.com
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