Dealmaking in the banking industry tempered somewhat in 1H 2022. The year began with a flurry of activity as January saw 20 whole-bank M&A deals announced, continuing the brisk pace seen in 2021. Since, however, deal activity moderated as a number of potential storm clouds appeared on the horizon including a war in Ukraine, hastening inflation, a meaningful shift in the interest rate outlook, and a pullback in equity valuations, bank and non-bank alike. That said, we view this moderation as less of an extinguishment of consolidation and more of a deferral of deal activity into future quarters, as the underlying forces driving bank consolidation in recent years (if not decades) all largely still hold and may even have been exacerbated by ongoing developments. If and as market conditions become less volatile and as the outlook becomes more visible in the coming quarters, we anticipate a significant uptick in deal announcements.
Deal pricing, on the other hand, has remained substantially more stable. In fact, the median price-to-tangible book and price-to-earnings (LTM) multiples for all transactions in 1H 2022 was 1.52x and 15.4x, respectively, all-but-identical to the medians of 1.54x and 15.3x seen in full-year 2021.
Over the course of 1H 2022, Olsen Palmer advised on a total of 13 announced or completed bank M&A transactions. Olsen Palmer remains one of the top 3-ranked community bank M&A advisors nationwide based on the number of whole-bank M&A transactions advised upon over the past 3 years, according to S&P Global. Individually, the firm’s Managing Partner Christopher Olsen has been the #1 ranked advisor nationwide since 2020.
Finally, on May 23rd, Olsen Palmer advised First Bank of Alabama in its agreement to acquire 2 branches from Southern States Bank.
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