What Top Acquirers Know

Wayne, New Jersey-based Valley National Bancorp’s expansion into Florida didn’t occur by chance.

The $33.8 billion asset bank boasts a long history of acquisitions — 17 deals since 1990 — but shifted its focus away from New Jersey and New York in 2014.

At that time, “the board looked from a strategic perspective and assessed the market conditions around us, and decided that we needed to align ourselves with a greater growth market,” says Valley National CEO Ira Robbins. There were natural ties with Florida: Customers migrated from Valley National’s home markets to the Southern state. So, it acquired $1.7 billion asset 1st United Bancorp, based in Boca Raton, that year, and $1.4 billion asset CNLBancshares, in Orlando, in 2015. In January 2018, it closed the acquisition of USAmeriBancorp, a $4.2 billion asset organization based in Clearwater. The USAmeriBancorp deal has been recognized as the top large bank deal in Bank Director’s 2020 RankingBanking study, which focuses on the best bank M&A deals across a range of categories.  

An examination of top serial acquirers featured in the RankingBanking study finds that success in M&A starts with a clear vision, along with the discipline to adhere to the strategy set by the board.

The string of acquisitions gave Valley National scale in the Florida market. But the strategy has evolved once again: Valley National closed its acquisition of $4.1 billion asset Oritani Financial Corp., based in Washington Township, New Jersey, in December 2019.

Shifting away from Florida was a decision driven largely by pricing in the market, explains Robbins. “Although the Southeast is a high growth market, and there’s a lot of opportunity there, the multiples of banks that are potentially viable for us are pretty high.” For Valley National today, an organic growth strategic makes more sense in the Southeast.

While a bank’s growth strategy should be preeminent, it’s in the execution that great acquirers set themselves apart.

First, these dealmakers look at M&A as an opportunity to improve. The acquired asset may sport a more robust credit process or superior technology, for example. The buyer can take advantage of those strengths. “That’s one of the unspoken benefits of M&A; it really requires you at that point in time to reassess how you’re connecting with your customers, and how you’re connecting with your employees, and is it in the most efficient and opportune manner,” says Robbins. “M&A — if you’re open-minded to it — provides you the ability and the time to go back and assess everything.”

Gaining talented employees with relationships in the acquired markets is often another benefit of M&A.

“To us, if we have a bank that’s performing well and doing well in its market, the people are a huge part of that success,” says Randall Chesler, CEO of $13.7 billion asset Glacier Bancorp. The Kalispell, Montana-based bank, renowned for acquiring “good banks in good markets with good people,” was recognized in the study for its M&A strategy and in the mid-sized deals category for its acquisition of $1 billion asset Inter-Mountain Bancorp, based in Bozeman, which closed in February 2018.

Keeping as many employees as possible eases the transition for customers. It also establishes a reputation among prospective sellers that as a buyer, the bank won’t gut the organization the seller has worked so hard to build.

People are our most important asset,” says James Ryan III, CEO of $20.4 billion asset Old National Bancorp. The Evansville, Indiana-based bank has closed 10 deals since 2007, and was recognized in the large bank deals category for its acquisition of $2.1 billion asset Anchor Bancorp, based in St. Paul, Minnesota, which closed in November 2017.

With each acquisition, the bank assembles a cultural integration team that includes legacy Old National and acquired staff. Engagement is measured through surveys of all employees — not just new ones. And Ryan, along with Chief Cultural Officer Kathy Schoettlin, spends a lot of one-on-one time with employees.

But if someone’s going to lose their job, Ryan says the bank is upfront about it and assists them through the transition. That can include helping to update resumes or putting affected employees in touch with other potential employers.

Ryan believes this approach to integration bolsters the bank’s reputation as a buyer. “We believe that is a key for our success,” he says. “[Sellers] want to partner with Old National because they see the long-term value in that partnership.”

Banks aren’t bought — they’re sold. And selling a bank is rarely an easy choice, particularly for smaller institutions with deep ties to their communities. But selling to an acquirer with a strong reputation can make it easier for boards to pull the trigger on a deal.