While merger & acquisition activity in the financial services sector certainly cooled down in the new year compared to the feverish M&A deals in late 2015, there were still plenty of deals to be had, especially for banks in the Midwest.
In fact, eight out of the 14 bank acquisitions announced in January 2016 came from sellers in four midwestern states: Illinois, Minnesota, Ohio, and Wisconsin, according to American Banker. Industry experts suggest that sluggish loan growth and razor-thin interest margins have led many regional and community banks in the region to sell to larger banks that can take advantage of more loan volume and increased operating efficiency.
Of course, there were other notable deals made between banks and other financial institutions in the Northeast and on the East Coast this month as well. Let’s run through some of January’s highest-profile M&A deals:
Billion-Dollar-Plus Deals in the Midwest
In 2016’s largest bank acquisition to date, Columbus-based Huntington Bancshares agreed to pay $3.4 billion to buy Akron-based rival FirstMerit. The deal, expected to close in the third quarter of 2016, would make Huntington Bancshares Ohio’s largest bank, boosting its total assets by 41% to $100 billion. The acquisition would also expand Huntington’s branch network by nearly 50% to more than 1,000 branches extending into the surrounding states of Michigan and Pennsylvania.
Just hours after the Huntington deal, Troy, Michigan-based Chemical Bank agreed to buy $6 billion-asset Talmer Bancorp for $1.1 billion. Upon its expected closing in the second half of 2016, the deal would bring Talmer Bank’s 81 branches in Michigan and northeastern Ohio under the Chemical Bank brand, boosting Chemical’s branch network by 41% to 266 total locations. Chemical Bank’s assets would grow by 60% to $16 billion while its deposits would swell to $13 billion, effectively making it the sixth-largest bank based in Michigan.
Smaller US Bank Deals Abound
In Chicago, Royal Financial Inc. agreed to buy $156 million-asset Park Bancorp and its five Park Federal Savings Bank branches in Chicago and Westmont for $240,000.
In the Northeast, Connecticut-based Liberty Bank bought Naugatuck Valley Financial Corporation, along with its $500 million in assets and nine Naugatuck Valley Savings and Loan branches in Connecticut’s New Haven and Fairfield counties, for a total of $78 million. The deal boosted $4 billion Liberty Bank’s assets by more than 12% and increased the size of its branch network by more than 15% to some 56 branches across the state of Connecticut.
OceanFirst Financial agreed to buy Cape Bancorp — along with its 22 branches in central and southern New Jersey counties, $1.1 billion in loans, and $1.3 billion in deposits — for $208.1 million. The deal would grow OceanFirst’s total assets by over 60% and nearly double the size of its branch network.
Further south, Premier Financial Bancorp, a $1.3 billion community bank in West Virginia, bought $245 million-asset First National Bankshares and its six First National Bank branch locations. The deal boosted Premier’s assets by nearly 20% while expanding its presence in Greenbrier Valley in West Virginia and into Covington, Virginia.
Payments provider TSYS agreed to buy Transfirst for $2.4 billion, which would add 235,000-plus small and medium-sized business clients to TSYS’s books and effectively make it the sixth-largest acquirer by revenue in the US. TSYS’s Merchant Solutions business would support more than 645,000 merchant outlets upon the deal’s closing.
Warsaw, New York-based Financial Institutions, which owns the $3 billion-asset Five Star Bank, bolstered its investment service business after acquiring Courier Capital, which offers customized investment management, investment consulting, and retirement plan services to some 1,100 individuals, businesses, and institutions. Before the $9 million acquisition, Financial Institutions’ investment advisory services generated just 2% of its total revenue, suggesting there’s plenty of room for further growth there.
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Before joining Dun & Bradstreet, Christian Hudspeth was a managing editor, senior financial writer and analyst for StreetAuthority.com (a financial newsletter publishing company), and wrote financial articles that were featured on MSN Money, Business Insider, Nasdaq.com, and several other well-known online outlets. Before he was an editor, Christian worked in the commercial banking industry for seven years.