US bank acquisitions by private equity and investor groups have accelerated with three new deals in the span of two weeks and now make up the highest percentage of all bank deals in over a decade.
Despite the dearth of US bank M&A, acquisitions by private equity and investor groups have not slowed down with six such announcements so far this year — still shy of the eight such deals seen in all of last year but more than any other year since 2019, according to S&P Global Market Intelligence data. As these announcements keep pace while traditional bank M&A continues to drag, they now make up 11% of all US bank M&A activity so far this year, the highest percentage since 2012.
Since July 1, four such deals have been announced, bringing the total assets of US banks sold to investors or private equity to $1.17 billion — the highest yearly total since 2018. Total deposits sold currently stand at just shy of $1 billion, also the highest yearly total since 2018.
To skirt the costly and time-consuming process of starting a de novo bank, investors are taking to bank acquisitions as a faster and cheaper alternative to enter the industry. This opportunity is particularly attractive right now given the current depressed bank valuations and lack of M&A, sources told S&P Global Market Intelligence last month.
Benefits for buyers, sellers
Most recently, Eureka Investor Group Inc. agreed to acquire Metairie, La.-based Eureka Homestead Bancorp Inc., and Savile Capital Group LLC announced its plan to acquire Cheyenne, Wyo.-based Farmers State Bankshares Inc. and its subsidiary Wyoming Bank & Trust.
By acquiring Farmers State, Savile can circumvent the challenges of standing up the technology required for a de novo bank and building up the bank's talent and culture from scratch, Savile COO David Wasitowski told Market Intelligence.
"Here, we wind up with a bank that has a pristine reputation in the state, a management team at the bank that's well respected in the state and with clients across the nation," Wasitowski said. "We're not going to spend years of training staff, getting staff to work together."
For sellers, the ability to retain current leadership and staff was a common rationale for selling to investor groups.
"The most important thing to us is that all the management, the employees of Wyoming Bank & Trust remains the same," Wyoming Bank & Trust's Vice Chairman and CEO Jeff Wallace said in an interview. "We've got over 100 years of history with Wyoming Bank & Trust, so we hated to see the bank just get merged with another bank."
In a press release, Eureka Homestead CEO Alan Heintzen assured customers they will continue to see "the same friendly faces" following its acquisition by Eureka Investor Group.
In another recent deal, the newly formed investor group, FSBH Inc. entered a definitive agreement to acquire Center, Texas-based Farmers Bancshares Inc. At $379.4 million in assets, Farmers Bancshares is the largest bank to sell to an investor group this year. Executives of both firms offered a similar rationale in a press release announcing the transaction.
"We are very pleased to be able to keep the existing management team in place following the merger," FSBH CEO Christopher Brewer said in the release.
