U.S. Bank M&A Slowly Picking Up as Some Banks Feel More 'Confident and Optimistic'
James Stevens, a partner in Troutman Pepper’s Financial Services Practice Group, was quoted in a September 10 S&P Market Intelligence article titled, " U.S. Bank M&A Slowly Picking Up as Some Banks Feel More 'Confident and Optimistic'."
"That need for scale, cost-spreading, the need for efficiency, the need to seize opportunity — all those things that drive M&A were overwhelmed in March and April with the cloud that brought along asset quality and general uncertainty. As that cloud of asset quality and other general uncertainty dissipated a little, those drivers that were there before are still there and are maybe even more enhanced," James Stevens, a partner at Troutman Pepper Hamilton Sanders LLP, said in an interview.
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A deal that is in- or adjacent-market and represents a small portion of the buyer's size reduces the risk profile and offers greater cost savings, important factors in a recession, said both Stevens and Kirk Hovde, managing principal and head of investment banking for Hovde Group LLC. Among the deals announced in August, the largest target had $1.29 billion in total assets.
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While most of the ongoing deal conversations consist of banks reengaging after a pandemic-induced pause, there are some new tie-ups being discussed, Stevens and Hovde said. "We saw some deals go on ice and now they are coming back to life. We have also seen some new deals coming up, and I think it's just around the perception of less uncertainty," Stevens said.
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Both Hovde and Stevens said they believe M&A could accelerate toward the end of the year or early-2021.
"As there is more certainty and we get more of an understanding of where we are with asset quality, the interest rate environment and from a political standpoint after the election, all those uncertainties become more certain," Stevens said. "You'll start to see more strategic, out-of-market transactions after that."