National Financial Services M&A Transaction Perspective
Bank mergers and acquisitions (M&A) remained slow through the third quarter of 2023, with a range of challenging issues cooling the bank M&A market. These challenges started early in 2023 with the unexpected liquidity crisis that led to multiple large bank failures, which then transitioned to concerns over the U.S. economy as the Federal Reserve continued to battle inflation by increasing interest rates. While still a developing situation, the geopolitical uncertainty in Israel and the Middle East likely adds ambiguity to the U.S. economy’s direction in upcoming months and could present further challenges to banks looking to pursue transactions.
Transaction activity through September 2023 slowed significantly from the prior year. Year-to-date through September 2023 saw a total of 76 announced transactions nationwide, which is significantly lower than the 128 transactions announced through September 2022.
Pricing for whole bank and thrift transactions in 2022 was nearly flat compared to 2021, with an average price to tangible book value (P/TBV) of 155% in 2022, compared to 157% in 2021. Pricing in 2022 also was reasonably in line with the pricing seen pre-pandemic of 158% P/TBV in 2019. Based on transactions with pricing data available, P/TBV is down in 2023, at an average of 132% through September 2023.
Stock prices for banks continue to face downward pressure in 2023. The Dow Jones U.S. Banks Index (DJUSBK) is down 3.95% at $403.63 for the 12-month period ended September 29, 2023, while the KBW Nasdaq Bank Index (BKX) is down 18.30% at $78.29 in the same period.
West Region
In the West Region, there were eight announced transactions year-to-date September 2023, which is behind the nine transactions announced through September 2022. Based on transactions with pricing data available, P/TBV averaged 170% in the West Region in 2022. Based on the four transactions with pricing data available, P/TBV has averaged 114% in the West Region through September 2023.
Mid-Atlantic Region
In the Mid-Atlantic Region, there were five announced transactions year-to-date September 2023, which is behind the 10 transactions announced through September 2022. Based on transactions with pricing data available, P/TBV averaged 127% in the Mid-Atlantic Region in 2022. Based on the four transactions with pricing data available, P/TBV has averaged 123% in the Mid-Atlantic Region through September 2023.
Midwest Region
In the Midwest Region, there were 32 announced transactions year-to-date September 2023, which is behind the 58 transactions announced through September 2022. Based on transactions with pricing data available, P/TBV averaged 150% in the Midwest Region in 2022. Based on the four transactions with pricing data available, P/TBV has averaged 133% in the Midwest Region through September 2023.
Northeast Region
In the Northeast Region, there were three announced transactions year-to-date September 2023, which is behind the four transactions announced through September 2022. Based on transactions with pricing data available, P/TBV averaged 149% in the Northeast Region in 2022. Based on the one transaction with pricing data available, P/TBV has averaged 116% in the Northeast Region through September 2023.
Southeast Region
In the Southeast Region, there were 15 announced transactions year-to-date September 2023, which is behind the 26 transactions announced through September 2022. Based on transactions with pricing data available, P/TBV averaged 173% in the Southeast Region in 2022. Based on the five transactions with pricing data available, P/TBV has averaged 143% in the Southeast Region through September 2023.
Southwest Region
In the Southwest Region, there were 13 announced transactions year-to-date September 2023, which is behind the 18 transactions announced through September 2022. Based on transactions with pricing data available, P/TBV averaged 172% in the Southwest Region in 2022. Based on the three transactions with pricing data available, P/TBV has averaged 145% in the Southwest Region through September 2023.
If you have any questions or need assistance, please reach out to a professional at FORVIS.