Bank mergers and acquisitions have steadily increased through the third quarter of 2024, although a range of issues have continued to cool the bank M&A market. Continued unrealized losses on securities portfolios, while shrinking due to the passage of time and rising interest rates, have combined with an uncertain economic outlook and an uncertain economic outlook and a presidential election to keep transactions below historic levels. However, if the market obtains some clarity around these challenges, many sellers who have stayed on the sidelines will likely consider a transaction. This could lead to an uptick in dealmaking in the fourth quarter of 2024 and into 2025.These challenges started early in 2023 with the unexpected liquidity crisis that led to multiple large bank failures, which then transitioned to concerns over the U.S. economy as the Federal Reserve continued to battle inflation by increasing interest rates. While still a developing situation, the geopolitical uncertainty in Israel and the Middle East likely adds additional ambiguity to the direction of the U.S. economy in the months to come and could present further challenges to banks looking to purse transactions.
Transaction activity through September 2024 has increased from the prior year. Year-to-date through September 2024 has seen a total of 93 announced transactions nationwide, which is higher than the 76 transactions announced through September 2023.
As noted in earlier updates, pricing for whole bank and thrift transactions in 2023 declined compared to 2022, with an average price to tangible book value (P/TBV) of 128% in 2023, compared to 155% in 2022. Based on transactions with pricing data available, P/TBV is down further in 2024, at an average of 124% through September 2024.
Stock prices for banks have finally started to rise after facing significant downward pressure over the past couple of years. The Dow Jones U.S. Banks Index (DJUSBK) is up 43.90% at $580.82 for the 12 months ended September 30, 2024, while the KBW Nasdaq Bank Index (BKX) is up 46.20% at $114.46 in the same period.
West Region
In the West Region, there have been 12 announced transactions year-to-date September 2024, which is more than the eight transactions announced through September 2023. Based on transactions with pricing data available, P/TBV averaged 108% in the West Region in 2023. Based on the six transactions with pricing data available, P/TBV has averaged 91% in the West Region through September 2024.
Mid-Atlantic Region
In the Mid-Atlantic Region, there have been 10 announced transactions year-to-date September 2024, which is double the five transactions announced through September 2023. Based on transactions with pricing data available, P/TBV averaged 121% in the Mid-Atlantic Region in 2023. Based on the seven transactions with pricing data available, P/TBV has averaged 92% in the Mid-Atlantic Region through September 2024.
Midwest Region
In the Midwest Region, there have been 36 announced transactions year-to-date September 2024, which is greater than the 32 transactions announced through September 2023. Based on transactions with pricing data available, P/TBV averaged 130% in the Midwest Region in 2023. Based on the 11 transactions with pricing data available, P/TBV has averaged 144% in the Midwest Region through September 2024.
Northeast Region
In the Northeast Region, there have been three announced transactions year-to-date September 2024, which is the same as the three transactions announced through September 2023. Based on transactions with pricing data available, P/TBV averaged 116% in the Northeast Region in 2023. Based on the one transaction with pricing data available, P/TBV has averaged 139% in the Northeast Region through September 2024.
Southeast Region
In the Southeast Region, there have been 18 announced transactions year-to-date September 2024, which is greater than the 15 transactions announced through September 2024. Based on transactions with pricing data available, P/TBV averaged 137% in the Southeast Region in 2023. Based on the nine transactions with pricing data available, P/TBV has averaged 139% in the Southeast Region through September 2024.
Southwest Region
In the Southwest Region, there have been 14 announced transactions year-to-date September 2024, which is one more than the 13 transactions announced through September 2024. Based on transactions with pricing data available, P/TBV averaged 145% in the Southwest Region in 2023. Based on the three transactions with pricing data available, P/TBV has averaged 142% in the Southwest Region through September 2024.