The bank M&A marketplace evaded the summer doldrums in July as 17 whole-bank transactions were announced over the course of the month, continuing an arc of freshening dealmaking in recent months. Indeed, while bank merger activity tempered earlier in the year in the wake of budding macroeconomic and geopolitical volatility, an uptick in announcements over the last two months suggests the M&A market may be thawing. If July’s deal pace holds through the rest of the year, the total deal count tally in 2022 would land just behind that of 2021.
Similarly, deal pricing freshened somewhat in July relative to the prior month. The median price-to-tangible book and median price-to-earnings (LTM) multiples both ticked up in July, to 1.7x and 14.7x, respectively. That said, caution is necessarily warranted if extrapolating July’s medians as a true measure of market levels as only 4 of the month’s 17 transactions publicly disclosed pricing with the P/TBV ranging from 1.3x to 2.1x (i.e., a measure of skew is likely at play). Of particular note, the median deal multiples in 2022 year-to-date through July are almost exactly identical to the full-year 2021 medians.
Dealmaking continues to largely be the province of community-sized banks. The median seller in July had assets of just over $200 million and no seller was larger than $1.8 billion. On the other side of the equation, the median buyer in July had assets of $1.1 billion and no buyer in July had assets greater than $18 billion
Finally, on July 14th, Olsen Palmer advised First Savanna Savings Bank in its agreement to be acquired by Citizens State Bank. This is the 40th announced or completed community bank M&A transaction Olsen Palmer has advised upon since 2020.
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