U.S. Community & Regional Bank M&A Outpacing Last Quarter and Last Year's Numbers

MCLEAN, Va., Aug. 6, 2014 /PRNewswire/ -- Martin Friedman, Co-Founder Managing Member and CIO of FJ Capital Management, LLC says merger and acquisition (M&A) activity in the U.S. small- and mid-capitalization bank space is alive and well, outpacing last year's numbers on both a deal volume and total value basis.

In its inaugural quarterly bank consolidation report released today, Friedman, a banking expert with 25 years of capital markets experience, notes 75 bank and thrift deals were announced in the second quarter vs. 58 in the previous quarter and 52 announced in the second quarter a year ago.  

These numbers represent the largest quarterly volume in the last 5 years and further confirm the pace of bank M&A in the U.S. is increasing. This numerical proof, along with an observed pick-up in the consolidation chatter among bank management teams, corroborates FJ Capital's thesis that M&A activity in the small- and mid-capitalization bank space is well on its way and could rival and possibly exceed the previous record of the mid-1990s consolidation that followed the savings and loan crisis.

Moreover, deal valuations are rising nicely, with a median price to tangible book value (P/TBV) multiple of 147% in the second quarter vs. 128% in the first quarter and 130% a year ago. These numbers can be somewhat misleading, according to Friedman, who says, "Not all banks are created equal…clearly there is a case of haves and have-nots in the community bank sector with banks generating higher ROEs commanding greater premiums."

Indeed, as noted in the report, higher performing bank transactions came at a median P/TBV of 197%, significantly higher than the 145% P/TBV multiple garnered by weaker banks.

FJ Capital Management, LLC is an SEC-registered investment adviser that analyzes and invests in community and regional banks through alternative strategies. The firm utilizes its extensive research background and a fundamental approach to understand the current banking environment. For additional information on the white paper or to further explore opportunities in the bank sector, please use the below contact information or visit www.fjcapital.com.

SOURCE FJ Capital Management, LLC