Bank Director 2020 Bank M & A Survey Results

Key Findings Include:

Acquisition Strategies

Forty-four percent of survey respondents expect to acquire a bank in 2020.

Most (60%) expect to be opportunistic acquirers that will focus on organic growth.

Most, at 68%, point to achieving expected cost savings and revenue synergies with an acquisition.

58% percent point to earnings per share accretion with 56% expecting profitability to improve going forward.

A little more than half (51%) say that retaining key personnel is a good measure of success.

One fourth expect to be active acquirors in 2021.

Banks are still seeking the same components in a target.

Deposits remain the most highly prized at 67%

More than half say that increasing earnings per share is a reason to acquire.

While acquisition drivers remain much the same, the barriers to completing a deal have shifted over the past five years.

Of great concern is the rising percentage of respondents who say there is a lack of suitable targets in markets they are in or want to enter: 56% express this concern, up 32 percentage points.

Willing to Pay for Quality
When describing their bank’s acquisition strategy, 44% indicate that they seek strategic acquisitions, regardless of price. One-quarter look for low-priced acquisitions of historically well-run banks; 27% are comfortable paying a premium for well-managed banks.

Price Remains a Barrier
Potential acquirers’ concerns about pricing as a barrier to deal making have dropped significantly — from 72% last year to 60% in this year’s survey. However, more respondents express concern about their ability to use stock as currency in a deal, as well as demands on their capital should they acquire. 

Effects on Capital
Most believe their bank’s capital levels are sufficient to weather the economic downturn, assuming a rapid (98%) or slow (98%) recovery in 2021, or mild recession (97%). Eighty-one percent believe they can weather a deeper recession. Just one-quarter plan to raise capital over the next six months.

Loan Losses
More than half (57%) believe their bank’s loan loss allowance will be sufficient to cover expected losses over the next 12 months. 

Tech Acquisitions Rare
Just 11% believe they’ll purchase a technology company. Of these, 63% express interest in buying a business or commercial lending platform; 63% are open to acquiring a consumer deposit-gathering platform. Almost half seek data analytics capabilities.

Bank Director survey with sponsorship from Crowe LLC. This survey was conducted with input from CEOs, CFOs, and Bank Directors from across the U.S.