Posted in Events.
November 30, 2017
Grand Rapids, Michigan
Richard F. Maroney, Jr.
Rick Maroney, Managing Director, ProBank Austin, addressed the Michigan Bankers Association Bank Management & Directors Conference today in Grand Rapids, Michigan. Rick’s presentation was entitled, How Washington is Influencing Community Bank M&A.
According to Rick, great expectations from Washington include the “Big Four”:
1) Corporate Tax Cuts;
2) Rollback of Bank Regulations;
3) Rate Increases and Steeper Yield Curve; and
4) Stronger Economic Growth.
Emerging factors driving community bank M&A include: valuation levels; valuation gaps; scarcity value; and Washington’s role in economic growth, lower taxes, and regulatory relief. Rick cited a recent Bank Director survey that found that the number one reason that banks sell is because of “regulatory costs.”
His presentation included 20-year bank consolidation trends and a 20-year view of profitability (ROAA). Rick reviewed bank equity values for publicly-traded banks and annual M&A pricing since 1998.
He outlined M&A trends pre- and post-election that included:
- Pace of consolidation has not materially changed since the election;
-More deals today are structured with stock as consideration;
-Selling banks are generally more profitable; and
-Pricing has materially increased since the election.
According to Rick, M&A pricing is dependent on Washington, especially tax cuts. He explained that despite pricing levels, the pace of consolidation could slow. And, he suggested that the door may be opening for de novo banks because recent consolidation has left a significant void in some markets, strong bank leaders stand ready to re-enter the market, and capital markets are strong.
Rick’s presentation also included the top 10 M&A deals in 2017 based on pricing and total book value.How Washington is Influencing Community Bank M&A