Chemical, Huntington acquisitions signal renewed momentum in M&A market

February 7, 2016 - MiBiz

 A pair of deals would give Chemical Financial Corp. and Huntington Bancshares Inc. larger footprints in Michigan and could renew the momentum for bank M&A in the state. The reason: Interest remains high among banks to at least explore a deal with a peer because they’re being pressured to drive growth and efficiencies as regulatory compliance costs rise and as organizations feel the need to invest in mobile banking technologies.

Chemical Financial’s $1.1 billion proposed acquisition of Talmer Bancorp Inc. and Huntington’s $3.4 billion acquisition of FirstMerit Corp. “should assist community bank boards in their efforts to determine the future of their respective banks as a buyer or seller and take appropriate steps in that regard,” said Jason Byrd, a managing director at Charter Capital Partners.

Recent acquisitions have made Chemical Financial a “meaningful player” across the state. “They are definitely carving out their piece of the market and they are absolutely going to be a competitive force in the state,” Byrd said.

There remains a lot of talk across the industry about bank M&A in the state. However, one potential barrier for future deals is that some banks are not looking to buy a smaller peer. The appetite among larger community banks to buy a bank below $1 billion in assets is “limited (because) the complexity of getting a deal done does not vary that widely,” Byrd said. “So in that market, sub-$1 billion, I believe when the actual transactions do come together, you will see similarly sized banks coming together under merger of equals structures.”

Directors and shareholders at some small community banks want to get the efficiencies that a merger can bring, yet they do not want to lose their community identity, Byrd said. He believes that has “pushed off” consolidation in the lower end of the market. “At some point, I believe that many of these community banks will need to find a partner,” Byrd said. more

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