A scorching summer for bank M&A

Bank consolidation has heated up in recent weeks. Eighteen deals, with a total value of more than $2.4 billion, have been announced since mid-July. Half of the year’s 10 biggest agreements ranked by deal value were announced in June and July.

To be sure, the overall pace of consolidation still lags that of prior years. The 143 deal announcements to date is 15% lower than during the same period last year. The aggregate deal value of $14.4 billion, excluding the BB&T-SunTrust megamerger, is off 31% from 2018.

Here are some of the most noteworthy deals announced in June and July.

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Prosperity-LegacyTexas
Prosperity Bancshares in Houston said June 17 that it was buying LegacyTexas Bank in Dallas. The $2.1 billion agreement is the fourth-biggest bank deal announced this year, and the largest this summer.

The price for the $9.3 billion-asset LegacyTexas is 216% of its tangible book value. That far exceeds the average premium this year of 161%.

Kevin Hanigan, LegacyTexas’ president and CEO, will become Prosperity’s president and chief operating officer. Three LegacyTexas directors, including Hanigan, will join Prosperity’s board.

"Our increased scale better positions us to invest in future opportunities and serve our customers,” said David Zalman (pictured), the chairman and CEO of the $22.4 billion-asset Prosperity. “This is a rare opportunity to significantly enhance our presence in the Dallas/Fort Worth" metropolitan statistical area.
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Valley National-Oritani
Valley National Bancorp in Wayne, N.J., has returned to dealmaking on its home turf after focusing on Florida in recent years. The $32.5 billion-asset Valley said June 26 that it had agreed to buy Oritani Financial in Township of Washington, N.J., for $740 million.

Valley executives said they found a good value in the $4.1 billion-asset Oritani, which agreed to be sold for just 140% of its tangible book value.

Buying Oritani, a former mutual, would double Valley’s market share in New Jersey’s Bergen County. The acquisition would also increase Valley’s Tier 1 common equity by more than 50 basis points.

“Oritani’s conservative credit culture, combined with their customer focus, should mesh seamlessly with that of Valley and our vision forward,” said Ira Robbins, Valley's president and CEO. “This capital-enriching transaction will enable Valley to continue to focus on improving the growth profile.”
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People’s United-United Financial
This $759 million deal may have been harder to justify without recent regulatory reform.

Buying the $7.3 billion-asset United Financial Bancorp in Bridgeport, Conn., would push People’s United Financial over $50 billion in assets. That would have made People’s United a systemically important financial institution had lawmakers not raised that threshold to $250 billion.

United, like Oritani, is selling for a low premium. The deal, announced July 15, priced United at just 135% of its tangible book value. Still, it is the fifth-biggest bank merger deal announced this year.

“With the fourth-largest deposit market share in the … Hartford and Springfield market, a complementary array of commercial and retail capabilities and a shared legacy of community giving, United will solidify our presence in the central Connecticut market and strengthen our franchise in western Massachusetts,” said Jack Barnes, the chairman and CEO of People’s United.

People’s United plans to let $1.8 billion of United’s loans run off. It would also sell $556 million in investment securities as part of a balance-sheet restructuring.
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WesBanco-Old Line
WesBanco is the latest West Virginia bank to make plans to enter the nation’s capital.

The $12.5 billion-asset company, based in Wheeling, agreed to buy the $3.1 billion-asset Old Line Bancshares in Bowie, Md., for $500 million. Old Line has branches in Baltimore and Washington.

MVB Financial in Fairmont and United Bankshares in Charleston have also focused heavily on Washington in recent years.

The deal, announced July 23 and expected to close by early 2020, is worth 177% of Old Line's tangible book value.

"This is an exciting time in the measured and thoughtful evolution and strategic diversification of WesBanco,” said Todd Clossin, the company’s president and CEO. The acquisition “is an example of the continued solid execution on our long-term growth strategies, as it brings together two high-quality institutions with disciplined risk cultures and a strong customer focus.”
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Simmons First-Landrum Co.
Simmons First National in Pine Bluff, Ark., finished July with the year’s ninth-biggest bank deal.

The $17.9 billion-asset Simmons agreed on July 31 to buy Landrum Co. in Columbia, Mo., for $433.9 million. The price is 175% of Landrum's tangible book value.

Landrum is the holding company for the $3.3 billion-asset Landmark Bank, which has 39 branches in Missouri, Oklahoma and Texas. The bank also has $2.1 billion in loans and $3 billion in deposits.

Landmark “will fit in our organization perfectly,” said George Makris Jr., Simmons’ chairman and CEO. Landmark “is a strong banking franchise with deep history and much success in the communities it serves.”
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S&T Bancorp-DNB Financial
S&T Bancorp’s pending purchase of DNB Financial in Downington, Pa., addresses needs at both banks.

The $7.2 billion-asset S&T, which is based in Indiana, Pa., would gain a sizable presence Philadelphia, where the $1.2 billion-asset DNB has 14 branches. DNB, meanwhile, seemingly put to rest a squabble with CT Opportunity Partners I, a big investor that was pushing for a sale.

The $206 million to be paid for DNB is 207% of its tangible book value.

Buying DNB "dovetails nicely with our expansion into the central Pennsylvania market in 2015, and our overall strategic growth strategy focused on Pennsylvania, Ohio and New York,” Todd Brice, S&T’s chief executive, said when the deal was announced June 5.
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Columbia Financial-Stewardship Financial
Columbia Financial in Fair Lawn, N.J., would pay $137 million in cash for Stewardship Financial in Midland Park, N.J. The $961 million-asset Stewardship is selling for 166.8% of its tangible book value.

As its name implies, Stewardship has a philanthropic focus, providing financial support to a range of churches and other nonprofits in its community. That is why the $6.7 billion-asset Columbia made a point in the press release announcing the deal June 7 to pledge to continue the seller’s charitable mission.

"Our companies share common values with a strong culture focused on relationships and serving our communities, making this combination a perfect partnership,” said Thomas Kemly, Columbia's president and CEO. “We greatly admire the philanthropic support Stewardship provides through its tithing program.”
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Carolina Financial-Carolina Trust
This one can be a bit confusing given the similar names of the buyer and seller.

Carolina Financial in Charleston, S.C., would pay $100.1 million for Carolina Trust BancShares in Lincolnton, N.C. The deal, announced July 15, would give the $3.9 billion-asset Carolina Financial an entree into Charlotte, N.C.

The $621 million-asset Carolina Trust has 11 branches, $474 million in loans and $523 million in deposits.

“This transaction allows for Carolina Financial to deepen its market presence in North Carolina,” Jerry Rexroad, Carolina Financial’s CEO, said in a press release. “Carolina Trust represents the best opportunity … to expand our footprint in these markets.”
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Wintrust buying two banks
Wintrust in Rosemont, Ill., loves to buy small banks in Chicago’s suburbs. It has agreed to buy two west of the Windy City this summer.

The $33 billion-asset company announced in early June it was buying STC Bancshares in St. Charles, Ill., for $47.7 million. On July 25, Wintrust reached a deal to buy the Countryside, Ill., parent of Countryside Bank, for $90.5 million.

Wintrust would gain a combined 11 branches, $615 million in loans and $755 million in deposits.

The acquisitions would provide “a great opportunity to expand and complement our market presence in the western suburbs of the Chicago metropolitan area,” said Ed Wehmer, Wintrust’s president and CEO.
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Other notable deals
The summer included several other merger pacts worth noting.

The $11.8 billion-asset Banner Corp. in Walla Walla, Wash., agreed on July 24 to buy AltaPacific Bancorp in Santa Rosa, Calif., for $87.4 million. That is 168% of the $436 million-asset AltaPacific's tangible book value.

In the Midwest, Associated Banc-Corp in Green Bay, Wis., said July 25 it had agreed to buy the $543 million-asset First Staunton Bancshares in Illinois for $76.3 million. Acquiring the $33 billion-asset Associated, led by CEO Philip Flynn (pictured), would raise its profile in St. Louis if the deal is approved by regulators.

Ben Franklin Bank in Arlington Heights, Ill., is going corporate, in a sense. The $93 million-asset bank plans to sell most of its assets and deposits to the $610 million-asset Corporate America Family Credit Union in Elgin, Ill., for around $14 million. The deal was announced July 16.