Bank M&A was sporadic in 2018.
Three of the biggest bank deals — Fifth Third Bancorp’s agreement to buy MB Financial, Cadence Bancorp’s for State Bank Financial and Independent Bank Group’s for Guaranty Bancorp — were announced within a nine-day period in the spring.
The remaining seven deals in the top 10 were spread throughout the year.
Overall, there were 253 deals announced as of Dec. 7, based on data compiled by Keefe, Bruyette & Woods and S&P Global Market Intelligence — virtually the same number as last year.
The combined value of all deals as of early December — $28.6 billion —
was 8% higher than the total for the full 2017. However, the Fifth Third-MB Financial deal accounted for 16% of the $28.6 billion.
An underlying theme involved sellers in high-growth markets finding buyers willing to pay healthy premiums for market share.
The average premium in 2018 was 172% of the seller’s tangible book value, an increase from 165% in 2017.
Only two deals in the top 10 occurred in one state — Colorado.
Here is a breakdown of the biggest bank acquisitions of 2018.
BUYER: Fifth Third
SELLER: MB Financial
DEAL VALUE: $4.6 billion
ANNOUNCED: May 21
Fifth Third in Cincinnati made a big splash with its first bank deal in a decade.
Its agreement to buy the $20 billion-asset MB Financial would be the biggest bank acquisition since Royal Bank of Canada bought City National in 2015. The deal also ranks among 2018’s biggest in terms of the premium: MB Financial is expected to sell for 276% of its tangible book value.
The $142 billion-asset Fifth Third will hold about 6.5% of Chicago’s deposits once the deal closes. Management also projects that the company will have a fifth of Chicago’s middle-market relationships.
“There were no other potential partners of the same caliber as MB Financial in the Chicago market,” Greg Carmichael (pictured), Fifth Third’s chairman and CEO, said in a release announcing the deal. “We view MB Financial as a unique partner in our efforts to build scale in this strategically important market.”
The acquisition has drawn some skepticism, largely due to aggressive cost-cutting plans and the roughly seven years it will take to earn back expected dilution to Fifth Third’s tangible book value.