Bank Director Releases 2021 Bank M&A Survey Results
Results Reveal Barriers to Making Deals Remain High; Market Uncertainty Stalls Growth Plans
BRENTWOOD, TENN., Nov. 17, 2020 (GLOBE NEWSWIRE) — BRENTWOOD, TENN., Nov. 17, 2020 – Bank Director, the leading information resource for directors and officers of financial institutions nationwide, today released its 2021 Bank M&A Survey, sponsored by Crowe LLP. Findings indicate that the barriers to dealmaking may prove difficult to surmount in today’s uncertain economic and political environment.
“Despite pressures on credit quality and profitability, the majority of respondents say that they’re not any more likely to sell their bank,” says Emily McCormick, vice president of research at Bank Director. “Most are confident that their bank can weather this crisis. That optimism may fuel their desire to remain independent — at least until pricing improves.”
The 2021 Bank M&A Survey dives into how the current environment has affected bank M&A and growth plans. In response to the uncertain landscape, 63% point to concerns about the quality of a potential target’s loan book as a top barrier to making an acquisition, up significantly from last year’s survey (36%).
More than one-third say their institution is likely to purchase a bank by the end of 2021; this represents a significant decline compared to last year’s survey when 44% believed an acquisition likely in 2020.
“Some say that 2020 is the year that never was due to the pandemic. This has been demonstrated in bank M&A with fewer deals during the pandemic period of 2020,” says Rick Childs, a partner at Crowe. “Still, some of the truisms of the past continue: There are more buyers than sellers, price is an issue, and many banks prefer organic growth. What has changed is that credit is king again: CECL is a significant factor, the future of the economy is unknown, and credit due diligence is once again a hot topic.”
Loan Losses
More than half (57%) believe their bank’s loan loss allowance will be sufficient to cover expected losses over the next 12 months.
Willing to Pay for Quality
When describing their bank’s acquisition strategy, 44% indicate that they seek strategic acquisitions, regardless of price. One-quarter look for low-priced acquisitions of historically well-run banks; 27% are comfortable paying a premium for well-managed banks.
Tech Acquisitions Rare
Just 11% believe they’ll purchase a technology company. Of these, 63% express interest in buying a business or commercial lending platform; 63% are open to acquiring a consumer deposit-gathering platform. Almost half seek data analytics capabilities.
Price Remains a Barrier
Potential acquirers’ concerns about pricing as a barrier to dealmaking have dropped significantly — from 72% last year to 60% in this year’s survey. However, more respondents express concern about their ability to use stock as currency in a deal, as well as demands on their capital should they acquire.
Effects on Capital
Most believe their bank’s capital levels are sufficient to weather the economic downturn, assuming a rapid (98%) or slow (98%) recovery in 2021, or mild recession (97%). Eighty-one percent believe they can weather a deeper recession. Just one-quarter plan to raise capital over the next six months.
The survey includes the views of 241 directors, CEOs and CFOs of U.S. banks. Full survey results are now available online at BankDirector.com.
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 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 and consulting 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.
The firm has more than 50 years’ experience serving financial services companies. Their industry-focused team of more than 800 professionals works with more than 1,800 financial services companies of all sizes. For more information, please visit www.crowe.com/fs.
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For more information, please contact Bank Director’s Director of Marketing, Deahna Welcher, at dwelcher@bankdirector.com.
CONTACT: Deahna Welcher Bank Director 615-777-8472 [email protected]
