Bank Director, an information resource for directors and officers of financial institutions, released its 2021 Bank M&A Survey, sponsored by Crowe. Findings indicated that the barriers to dealmaking may prove difficult to surmount in today’s uncertain economic and political environment.
“Despite pressures on credit quality and profitability, the majority of respondents say that they’re not any more likely to sell their bank,” Emily McCormick, vice president of research at Bank Director, said. “Most are confident that their bank can weather this crisis. That optimism may fuel their desire to remain independent — at least until pricing improves.”
The 2021 Bank M&A Survey dove into how the current environment has affected bank M&A and growth plans. In response to the uncertain landscape, 63% of respondents pointed to concerns about the quality of a potential target’s loan book as a top barrier to making an acquisition, which was up from last year’s survey (36%).
More than one third said their institution is likely to purchase a bank by the end of 2021; this represents a decline compared to last year’s survey when 44% believed an acquisition was likely in 2020.
“Some say that 2020 is the year that never was due to the pandemic. This has been demonstrated in bank M&A, with fewer deals during the pandemic period of 2020,” Rick Childs, a partner at Crowe, said. “Still, some of the truisms of the past continue: There are more buyers than sellers, price is an issue and many banks prefer organic growth. What has changed is that credit is king again, CECL is a significant factor, the future of the economy is unknown and credit due diligence is once again a hot topic.”
Key Survey Findings
The survey includes the views of 241 directors, CEOs and CFOs of U.S. banks.
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