2018’S Fourth Quarter Bank M&A Activity Slips Slightly, While Yearly Totals Rose from 2017

Legacy Solutions (ILS)
, the leading provider of data and image
migrations to the financial industry, released its annual review of
industry merger and acquisition data for 2018. Derived from data
provided by the Federal
Reserve System
, the research quantifies all U.S. bank M&A activity
closing in 2018.

There were 62 bank M&A deals closed in the 4th quarter of
2018. Which is a slight drop of 11%, over the same period of 2017.
However, Q4 of 2018 was on par with Q1 and Q2 each of which had 65 deals
close. M&A deals ended the year up with a total of 266 deals closed. Q4
of 2018 marked the third straight year that closed with 60 plus deals in
the final quarter and is continuing the year over year trend to climb
back towards the historical highs of 2015. The outlook for Q1 of 2019 is
also strong with 54 deals having already been announced. One of which is
the merger between BB&T and Sun Trust which, at a $28.2 billion
transaction, is easily the largest bank merger since the 2008 financial
crisis. This merged institution will become the sixth largest bank in
the United States with an estimated $442 billion in assets. “This deal
alone could change the M&A landscape for 2019 as community banks will
benefit from the planned divestiture of $1.4 billion in deposits and
testing governmental and regulators tolerance for more large bank
mergers across the country and a renewed wave of mid-tier
consolidation,” according to Kris Bishop President of Integrated Legacy

2018 ended with total M&A activity up 7%, or 18 deals, over the previous
year. There was also an 8% increase in the combined value of all deals
in 2018 ($28.6 billion). However, one large deal, Fifth Third’s
acquisition of MB Financial, accounted for 16% of the entire $28.6
billion. Continued market growth at this rate would lead to M&A activity
potentially returning to the numbers seen in 2015 (349 deals closed) in
the next 3 to 5 years. 2018 closed only 9% off the 5-year average of 292
deals. 2018 marks the seventh straight year with over 240 transactions
announced during the year, and the fifth straight year in which more
than 4% of the institutions at the beginning of the year sold. Based on
these trends, and without attempting to identify how any market decline
in the financial sector will impact M&A activity, this would point to
between 250 and 295 bank acquisitions to be announced in 2019. In
summation, 2018 was a sporadic year for the M&A market with a surge of
deals closed in Q3 (74) and a strong close of the year in Q4 (65).

Considering the market impact of the newly elected congress and the 2020
Presidential election, these numbers are very encouraging. One of the
most hindering factors of M&A activity is uncertainty. Investors are
hesitant to make significant investments if they are unsure about future
changes to policies. Thankfully, low interest rates and the tax cuts
have contributed to a healthy M&A market producing high valuations for
exiting business owners the last few years. “The now divided Congress
reduces the chances of any changes in policies that would significantly
impact the market conditions before 2020. Unless we see significant
bipartisanship, the most likely outcome is gridlock, which is good for
the markets in the short-term,” said Bishop.

About Integrated Legacy Systems

Headquartered in Birmingham, Ala., Integrated Legacy Solutions (ILS)
provides industry leading technology for image and data migrations to
the financial industry. ILS’s leadership team has performed data
conversion for thousands of financial institutions over their 20 plus
years in the financial industry. ILS has designed innovative ways to
migrate data with greater efficiency than other costly and
time-consuming methods of data conversion. ILS’s success is focused on 3
key areas; customer service, the business (or conversion) process, and
the latest technology to migrate legacy systems quickly with minimal
disruption to the client’s production environment.

To download the entire ILS 2018 M&A report click: HERE


Bobby Childs, 205-965-4005

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