Integrated Legacy Solutions (ILS), the leading provider of data and image migrations to the financial industry, released its quarterly review of industry merger and acquisition data for the second quarter of 2019. Derived from data provided by the Federal Reserve System, the research quantifies all U.S. bank M&A activity closing in the second quarter of 2019.
The value of the deals announced in 2019 so far dwarfs that of 2018. A large portion of the extensive deal value increase came from the first quarter announcement of BB&T Corp. and Sun Trust Bank’s merger, which is the largest deal since the 2008 recession. This deal helped overall announced deal value in 2019 to surge to over $40 billion compared to just $16 billion in the first half of 2018. As expected, though, deal volume did drop in Q2 of 2019. Even though, deal volume fell 80% compared to that of Q1 if the BB&T/Sun Trust merger is removed from the equation the deal volume was about the same as Q1. While the second quarter did see deal value number drop it still saw a total M&A announced deal value of $7.3 billion. Out of this $7.3 billion commercial and retail banks remained the most active sub-sector accounting for 62% of announced deals in Q2.
From a strict quantity standpoint, the second quarter of 2019 ran almost identical to the first quarter. In fact, the second quarter saw just one more deal closed (66 M&A deals) than the previous quarter putting the number of deals closed for 2019 thus far at 131. This is also on par for how 2018 began (130 M&A deals through the end of Q2). The second quarter of 2019 saw the trend of over seven years continue by having over 60 deals closed. The trend continues with a 47% increase in deals closed verses what was announced in Q1. Another interesting trend is seeing credit unions, who are looking to increase scale and market share, beginning to buy banks at the highest rate in over five years. In 2012 there was only one transaction of a credit union buying a bank, but that number grew to seven in 2018 and 9 have already been announced in the first half of 2019.
“Although financial services tapped the brakes slightly in deal activity in Q2, we still see many attractive opportunities in the lower end of the mid-tier banking space,” said Kris Bishop, President and CEO of Integrated Legacy Solutions. “The current round of payment processor deals, for example, affects banking and technology, too. Banking, Credit Union and many Fintech company leaders are finding more ways to consolidate their areas of strength and profitability—and shedding some parts of the business that no longer make strategic sense.”
Other notable insights from the second quarter of 2019 include:
- The Chicago region had the most deals closed in Q2 with 15 deals closed. Which is also a 15% increase from Q1 of 2018.
- The Southwest region had the fewest amount of deals closed in Q2 with 5 deals closed.
- The New England region saw the most significant change from Q2 of 2018 to Q2 of 2019 with a 100% increase in deals closed.
- Q2 of 2019 has had the most deals closed since 2016.
- 41% of Q2’s deals came from the Chicago and Kansas City regions.
- The second quarter averages almost 68 deals over the past 5 years.
- No regions saw a decrease of over 3 deals closed in Q2.
- The most active regions over the past 5 years are the Chicago region and Kansas City region.
About Integrated Legacy Solutions
Headquartered in Birmingham, Ala., Integrated Legacy Solutions (ILS) provides industry leading technology for image and data migrations to the financial industry. ILS’s leadership team has performed data conversion for thousands of financial institutions over their 20 plus years in the financial industry. ILS has designed innovative ways to migrate data with greater efficiency than other costly and time-consuming methods of data conversion. ILS’s success is focused on 3 key areas; customer service, the business (or conversion) process, and the latest technology to migrate legacy systems quickly with minimal disruption to the client’s production environment.
To download the entire ILS 2019 Q2 M&A report with charts and tables click: HERE