Magazine article American Banker

M&A Market Opens Year with Barely A Whimper: January Brought Deal for Countrywide, and Not Much Else

Magazine article American Banker

M&A Market Opens Year with Barely A Whimper: January Brought Deal for Countrywide, and Not Much Else

Article excerpt

One indication of how low expectations have fallen in the area of bank and thrift acquisitions is that the slowest January in recent memory struck some observers as surprisingly brisk.

Through January, 12 deals had been announced, according to data from Sandler O'Neill & Partners LP and SNL Financial, compared with 35 in January 2007 and 20 in January 2006. If the pace holds, 2008 will go down as the slowest year for bank mergers and acquisitions since at least 1990.

Several investment bankers, lawyers, and analysts said the drought could easily have been more intense. With credit quality deteriorating, the capital markets drying up, and bank stock prices sagging, M&A conditions are hardly ideal, they said.

"Twelve? Really?" said David P. Lazar, a managing director and the head of Middle Atlantic bank M&A at Stifel, Nicolaus & Co. Inc. He said he would have guessed five.

Damon DelMonte, an analyst at KBW Inc.'s Keefe, Bruyette & Woods Inc., said he would have guessed "maybe two."

Of course, the 12 are hardly blockbusters. Other than Bank of America Corp.'s agreement to acquire Countrywide Financial Inc. for $4.1 billion, most of the deals were for banks or thrifts with assets of less than $300 million.

Matthew Schultheis, an analyst at Ferris Baker Watts Inc., said the size of the announced transactions indicates the market is far from robust.

"When I look at these deals, I am not particularly wowed," he said.

Mr. Schultheis said that the rest of the quarter could be even slower and that the January activity is likely just overhang from last year. "The negotiation cycle" for the deals announced this past month probably started before the market turmoil, he said. "These things don't get done very quickly. It's generally at least a six-month process."

Brian R. …

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