The number of deals involving U.S. banks acquiring specialty lenders year-to-date in 2022 was the lowest over the past 10 years, supplanting the previous low posted in 2020, a year deeply affected by COVID-19.
There have been a total of 12 such deals in 2022 so far, compared with 21 in 2021 and 13 during 2020, according to an S&P Global Market Intelligence analysis.
Banks with above $10 billion in assets lead the way
Community banks have mostly dominated the specialty lender space since 2012, bagging more deals compared to banks with above $10 billion in assets. However, year-to-date data shows larger banks were more active than community banks in 2022, with seven and five transactions, respectively.
This is the first time since 2012 that the number of specialty lender deals by community banks have dropped to a single digit. Such banks booked 10 deals in 2016 and 10 in 2020.
Top deals of 2022
Among banks with more than $10 billion in assets, Charlotte, N.C.-based Truist Financial Corp.'s pending $3.4 billion deal to acquire BankDirect Capital Finance LLC from Dallas-based Texas Capital Bancshares Inc. was the largest announced this year. Truist Financial, which is making the acquisition through its unit AFCO Credit Corp., bested its own previous record of acquiring point-of-sale home improvement lender Service Finance Co. LLC in 2021.
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The BankDirect Capital acquisition is expected to double Truist Financial's premium finance business, increase its capabilities to include life insurance and expand its West Coast presence, Truist Financial CFO Michael Baron Maguire said during the company's third-quarter earnings call.
Marietta, Ohio-based Peoples Bancorp Inc.'s acquisition of Excelsior, Minn.-based equipment financing provider Vantage Financial LLC in a $54 million deal was the largest among community banks.
Rising loan-to-deposit ratio
The aggregate loan-to-deposit ratio of 60.2% for U.S. banks during the second quarter was the highest in the past six quarters.
During the second quarter, total deposits dipped to $19.560 trillion, down 1.8% from $19.930 trillion in the first quarter. By contrast, total loans at U.S. banks increased by 3.7% to $11.770 trillion during the quarter, the highest quarter-over-quarter loan growth since the second quarter of 2020.
