Wintrust Financial Corp.'s $512.4 million acquisition of Macatawa Bank Corp. could give the industry optimism that some deals can receive timely approval, without a hitch.
The banks' relative sizes and Wintrust's history as a serial acquirer could aid approval of the second-largest deal announced so far this year, deal advisers said. The companies anticipate closing it in the second half of 2024, a timeline advisers said is doable because the transaction is smaller and likely less complicated than recent deals that have taken long periods to receive approval.
Regulators could use this deal as an example that they are not in the business of blocking mergers, said Lawrence Kaplan, counsel and chair of Paul Hastings LLP's bank regulatory group.
"It should be relatively straightforward. I think it can be a great example for regulators to show, 'We're not opposed to mergers if everybody has a clean background,'" Kaplan said in an interview.
The deal could offer a glimmer of hope for banks staying on the bank M&A sidelines due to the regulatory environment, barring any issues such as consumer group opposition, said James Stevens, partner and co-leader of Troutman Pepper Hamilton Sanders LLP's Financial Services Industry Group.
"I would think that this is a transaction that will be great because it will demonstrate to the market that deals that are simple, like this one, get approved, and it doesn't actually take ... that long to get it approved," Stevens said in an interview.
Wintrust expects the deal to go through without issues as it has "a terrific relationship" with its regulators, President and CEO Timothy Crane said in an interview, though he acknowledged the company has yet to do a deal since 2019. The deal only requires approval by the Federal Reserve, according to Wintrust.
In addition to timely approval, advisers also expect the deal to move through the regulatory approval process without any special provisions like other recent bank deals have received, such as Provident Financial Services Inc.'s acquisition of Lakeland Bancorp Inc.
"I don't think that we're in a new era where every M&A deal that gets approved is going to have conditions on it," Stevens said. "I think that historically and going forward, the regulators will do that when necessary, in their minds, to be in a position to approve a transaction."
Wintrust's purchase of Macatawa seems easy to approve, likely to be completed quickly and unlikely to have material conditions, Stevens added.
Barclays analyst Jared Shaw and Stephens analyst Terry McEvoy also do not anticipate special provisions because Wintrust has done many deals in the past, both analysts said in interviews. Other industry experts agree that Wintrust's past deal history, in which it has completed six bank deals since 2016, bodes well for speedy approval.
"They have a good track record and presumably continuing good regulatory credibility, so it wouldn't seem like there would be any issues in this one," Charles Crowley, a managing director on the depository investment banking team at Janney Montgomery Scott LLC, said in an interview.
McEvoy also noted that Wintrust's capital levels and lack of commercial real estate exposure also put it in a good position for regulatory approval.
Another factor that could ease approval is the size of the banks, Crowley noted. Macatawa had just $2.61 billion in assets at March 31, making up less than 5% of Wintrust's $57.58 billion in assets at the same time.
"You have two strong banks coming together, and there's no market overlap, no concentration issues," Crowley said. It does not seem "on the surface that there would be any real impediment to a timely approval."
A timely approval could signal regulators' loosening their grip on bank M&A approvals.
"Generally regulators realize that there's no way these smaller banks are going to be able to keep up with the expense required for enterprise risk management and that it's in the best interest of the industry and also society to have more consolidation going on," Shaw said.