Acquire or Be Acquired Perspectives: How to Address the Social Issues of M&A


culture-5-4-18.png	Steele_Sally.pngThis is the final installment in a five-part series that examines the bank M&A market from the perspective of five attendees at Bank Director’s Acquire or Be Acquired conference, which occurred in late January at the Arizona Biltmore resort in Phoenix.

Read the perspectives of other industry leaders:
John Asbury, president and CEO of Union Bankshares
Gary Bronstein, a partner at Kilpatrick Townsend & Stockton LLP
Eugene Ludwig, founder and CEO of Promontory Financial Group
Kirk Wycoff, managing partner of Patriot Financial Partners, L.P.


It is tempting to think that last year’s tax cuts will spur deal-making in the bank industry. The cuts have driven up profits and bolstered valuations, with bank stocks trading at their highest earnings multiples since before the financial crisis. But deal volume ebbed instead of flowed last year.

“The tax reform allows potential sellers to wait longer to see how things evolve,” says Sally Steele, chairwoman of Community Bank System, Inc., an $11-billion bank based in Dewitt, New York.

Steele made this point while attending Bank Director’s 2018 Acquire or Be Acquired conference in January at the Arizona Biltmore resort in Phoenix. Her perspective on the M&A landscape is one of five that Bank Director cultivated from attendees at the event.

Whether it is prudent for a bank to sit on the sidelines as things evolve, rather than take advantage of a high valuation, is a risk—particularly when it comes to regulation. “You might have a four-year window where we have a kinder, gentler regulatory environment,” Steele notes.

All of this speaks to the axiom that banks are sold, not bought. “Folks have to come to a decision that selling is a good strategy, whatever the motivation,” says Steele.

Value plays an obvious role in this decision, but it alone is not enough. Social issues involving leadership and culture also play a major role, Steele says.

For instance, succession is a perennial topic of conversation in the industry. As leaders retire, it can be hard to find successors that are qualified to step into the void. One way to address this is to sell the bank.

There are also times when the current leadership is not a good fit, irrespective of retirement. This came up in one of Community Bank System’s recent acquisitions, where the CEO was better suited to be a commercial lender than the CEO.

Steele speaks on these issues from experience, as she has served as a director of banks that have been both buyers and sellers.

Prior to serving on the board of Community Bank System, Steele was a director of Grange National Banc Corp., a Pennsylvania-based bank that grew to $278 million in assets before selling in 2003 to her current bank.

Since then, Community Bank System has acquired seven other banks, the biggest and most recent being Merchants Bancshares, a $1.9-billion bank based in Vermont, acquired last year.

The principal motivation for buyers tends to be growth. The bank industry has consolidated every year since 1984. Prior to that, the number of banks in the country tended to grow on an annual basis. Since then, it has dropped without interruption every year.

Given this, it is easy to understand why banks are so inclined to grow. There comes a point in a consolidating industry when the law of the jungle takes hold, forcing banks to choose between eating or being eaten.

This motivation helps explain the tendency for mergers and acquisitions to impair, as opposed to improve, shareholder value. It was the imperative to grow, after all, that led banks in the prelude to the financial crisis to acquire subprime mortgage originators, as Bank of America Corporation did with Countrywide Financial and Wachovia did with Golden West.

Regardless of the numbers, however, Steele emphasizes the central role that culture plays in the acquisition process. “From a buyer’s perspective, it’s about how the combination fits,” says Steele. “Fits in a lot of different ways, not only monetarily and economically, but also the culture is huge. Bringing in the wrong culture just doesn’t work. I don’t care what anybody says, it doesn’t work.”

As the chairwoman of an acquisitive bank, this is one reason Steele attends the annual Acquire or Be Acquired conference, coming four out of the last five years.

“I’ve been through the acquisition process, and it’s a scary thing,” says Steele. “There is a lot of distrust when folks start approaching you about that kind of thing. So having rapport and thinking, ‘Oh, I met that person at the conference.’ That’s helpful. So much of it is personal. I don’t care what anybody says.”

Acquire or Be Acquired Perspectives: Two Banking Megatrends to Watch For


megatrends-4-27-18.png	Bronstein_Gary.pngThis is the fourth in a five-part series that examines the bank M&A market from the perspective of five attendees at Bank Director’s Acquire or Be Acquired conference, which occurred in late January at the Arizona Biltmore resort in Phoenix.

Read the perspectives of other industry leaders:
John Asbury, president and CEO of Union Bankshares
Eugene Ludwig, founder and CEO of Promontory Financial Group
Kirk Wycoff, managing partner of Patriot Financial Partners, L.P.


There were two industry trends at the forefront of attendees’ minds at the 2018 Acquire or Be Acquired conference hosted earlier this year by Bank Director at the Biltmore resort in Phoenix: the heating up of technology and the cooling down of M&A.

This was echoed in a conversation that Bank Director had at the conference with Gary Bronstein, a partner at Kilpatrick Townsend & Stockton LLP, who presented at the event and said that his biggest takeaways came from conversations about technology.

Bronstein is one of five perspectives Bank Director cultivated about M&A following its annual conference in late January.
The bank industry is no stranger to changes, many of which have led commentators and industry observers in the past to proclaim the death of traditional banks. Yet, there was a palatable sense among bankers in Phoenix that the evolution in technology happening right now could indeed be different.

“What does all of this actually mean?” asked Bronstein. “It’s pretty general at this point, but the demographics are changing. There’s a recognition that, once you get below a certain age range, people stop going into branches.”

The impact of this is starting to be reflected by trends in deposit growth. “I thought it was interesting to learn that, historically, the community banks typically increased their deposit bases by taking customers away from larger banks, but it appears that this trend has reversed itself,” says Bronstein. “The largest banks in the United States are now organically growing deposits even though they pay rates that are considerably lower than what community banks pay.”

Bronstein notes that brand recognition is one explanation for this. “When a young person moves to a new place and they need to open a bank account, they pick a bank with a household name,” says Bronstein. But he also believes that it could be driven by the ability of large banks to afford better technology that better appeals to younger generations.

One consequence is that banks should prioritize efforts to recruit directors with technology experience. “It’s important to have the right kind of expertise on your board,” says Bronstein. “Banks have been good about having accounting expertise on their board because, particularly for public companies, you are essentially required to have that for your audit committee. But I think equally as important today is technology expertise. It is important to make the effort to try to find it.”

Whether a bank is successful at recruiting the right expertise depends in part on location. “In rural areas this can be more difficult,” says Bronstein. “In urban areas or around urban areas, there are plenty of prospects with technology experience out there. It’s just a question of picking the right person.”

In addition to conversations about technology, Bronstein also noticed at the 2018 Acquire or Be Acquired conference that bankers seem more optimistic than at any time over the past decade. But interestingly, that optimism does not appear to be filtering through to M&A activity.

What’s causing this juxtaposition? There are few likely culprits, Bronstein notes.

The first is that there are not as many buyers in the market. “A theme at the conference was recognition on the part of people involved in bank M&A on a daily basis, including myself, that in many markets there is a limited number of buyers,” says Bronstein.

Underlying this is the perception that it is safer and simpler to grow organically. “There are some banks that have come to the conclusion that they do not want to be buyers,” says Bronstein. “They do not want to take on the risk. They do not want to do the work because it is not an effective use of their management capital.”

Another reason Bronstein offers for the underwhelming M&A market is that only a limited number of banks have currencies that are potent enough to make highly accretive acquisitions.

Many banks are trading for high multiples to their earnings, of course, but the problem is that much of the industry is in the same boat. This leaves few opportunities for banks with high valuations to realize earnings and book value accretion from the acquisition of banks with low valuations.

There’s also the simple matter of arithmetic. As the bank industry consolidates, with an average of 4 percent of banks disappearing by way of merger or acquisition each year, the number of prospective targets shrinks. And to Bronstein’s earlier point, this is a trend that is only likely to continue as community and regional banks seek the scale needed to compete against the technology offerings of the big banks.

Acquire or Be Acquired Perspectives: One True Thing About Banking and Finance


strategy-4-20-18.pngLudwig, Gene.pngThis is the third in a five-part series that examines the bank M&A market from the perspective of five attendees at Bank Director’s Acquire or Be Acquired conference, which occurred in late January at the Arizona Biltmore resort in Phoenix.

Read the perspectives of other industry leaders:
John Asbury, president and CEO of Union Bankshares
Gary Bronstein, a partner at Kilpatrick Townsend & Stockton LLP
Kirk Wycoff, managing partner of Patriot Financial Partners, L.P.


If you have seen as many cycles in the bank industry as Eugene Ludwig, founder and CEO of Promontory Financial Group and a former comptroller of the currency, you know the time to be most vigilant is not when things seem bleak, but instead when things seems brilliant.

“The one thing I’m certain of is that the good times may go on for a year, two years, five years, seven years, but they will not go on forever,” says Ludwig. “Those folks that continue to be disciplined…will make it through good times and have advantages in bad times. Those that are imprudent will be gone.”

Ludwig made this point while attending Bank Director’s most recent Acquire or Be Acquired conference held earlier this year at the Arizona Biltmore resort in Phoenix. Ludwig’s perspective on banking and the M&A landscape is one of five that Bank Director has solicited from attendees at the annual conference.

“We’re obviously in good times,” says Ludwig. “The general spirit of the community banking session I popped into was upbeat and optimistic. Also, as Marshall McLuhan said, ‘The message is in the medium.’ The medium here is the size of the audience—1,100 people. Audiences tend to slim out in tough times. Having said that, I think people are sober about the challenges the banking industry faces.”

When Ludwig talks about the challenges banks confront, the first thing he talks about is technology, “both accepting new technologies and being able to utilize them effectively on one hand and also not losing customers to new entrants in the marketplace on the other hand.”

One upside for community banks, says Ludwig, is that they seem to be less vulnerable than regional and money center banks to the threat posed by the largest technology companies with the deepest pockets.

“I think Amazon and Google most likely will be more threatening to the mid- and large-sized institutions than the small ones—though still very threatening because the consumer loan business, where they will focus, is fundamentally not a community bank business or even a particularly regional bank business,” says Ludwig. “That’s a big bank business or specialty lender business.”

The same is true on the liability side of the balance sheet, says Ludwig. “The heart of community banking is core deposits and deposit-taking. As a big commercial entity, it’s still perhaps less likely that Amazon is able to get a bank charter with access to deposit insurance so it’s at a disadvantage in terms of core deposits and having a full suite of banking services the way banks do. If Amazon does get a charter, or the equivalent, then the community bank still—at least for a time—has community feel and touch and personal ties that will prove highly beneficial to it compared to other deposit gatherers.”

In addition to technology, discussions about the state of the M&A market obviously loomed large at this year’s Acquire or Be Acquired conference. Ludwig agrees with other industry observers who have characterized the current M&A activity as lukewarm.

“It is one of those promises of things to come that for a long time hasn’t come,” says Ludwig. “There is of course M&A activity, but there has been a belief among some that there would be an explosion in activity and that hasn’t happened.”

Ludwig’s comments echo those of fellow conference attendee Kirk Wycoff, managing partner of Patriot Financial Partners, a private equity firm based in Philadelphia. An average of 4 percent of banks enter into mergers or acquisitions each year, notes Wycoff in an interview with Bank Director. There is variation from year to year, but it tends to be on the margin and the absolute number of transactions should trend lower as the industry consolidates.

Ludwig points to two reasons for what seems to be the recent and modest lull in M&A activity. First, with bank valuations at their highest level in a decade, deals continue to look expensive in many parts of the country. And on a more granular basis, Ludwig notes “there is less differentiation among valuations within the industry than one would expect” given the differences among bank franchises. “Having said that, every now and then, this can also produce profound opportunity because individual institutions hit air pockets or run out of management gas,” he says. “So there are definite opportunities in the marketplace.”

The thing to watch in this regard is the quality of a bank’s deposit franchise. “If you run bank valuations in the community banking sector, and I’ve owned a couple in my time, it’s all about the deposits,” says Ludwig.

I think that we’re getting into an era where deposit funding will be at a premium,” Ludwig continues. “When we started Promontory Interfinancial Network in 2001, banks were crying for deposits, [unlike] the last few years. (Editor’s note: Ludwig was one of Promontory Interfinancial Network’s founders and currently serves as chairman of the board, although the companies operate independently. Ludwig sold Promontory Financial Group to IBM Corp. in 2016 and continues as its CEO.) It may not go back to that, but it could. One thing true of banking and finance is that it’s cyclical. As Mark Twain said: ‘History may not repeat itself, but it rhymes.’”

Acquire or Be Acquired Perspectives: A Bank Investor Talks M&A


acquisition-4-13-18.pngWycoff, Kirk.pngThis is the second in a five-part series that examines the bank M&A market from the perspective of five attendees at Bank Director’s Acquire or Be Acquired conference, which occurred in late January at the Arizona Biltmore resort in Phoenix.

Read the perspectives of other industry leaders:
John Asbury, president and CEO of Union Bankshares
Gary Bronstein, a partner at Kilpatrick Townsend & Stockton LLP
Eugene Ludwig, founder and CEO of Promontory Financial Group


It’s tempting to think that rising profits and higher stock valuations will spur merger and acquisition (M&A) activity in the bank industry. But that isn’t necessarily the case, says Kirk Wycoff, managing partner of Patriot Financial Partners L.P., a Philadelphia-based private equity fund that invests in banks with between $500 million and $5 billion in assets.

Wycoff characterizes the current M&A landscape as lukewarm. He gives it a grade of B. “About 4 percent of the industry consolidates every year,” he notes. “So 25 years ago, when there were 15,000 banks, there were 600 bank transactions a year. Now there are 6,000 banks, which translates into 240 transactions a year. The investment bankers always say, ‘Next year is going to be the best year ever,’ yet it’s always around 4 percent.”

There is no way to predict future transaction volumes with precision, of course, but Wycoff brings a lot of experience to bear on the issue. From 1991 to 2004, he was chairman and CEO of Progress Financial Corp., growing the Philadelphia-based bank from $280 million in assets to $1.2 billion before selling it to FleetBoston Financial Corp. After Bank of America Corp. bought FleetBoston in 2005, Wycoff founded Philadelphia-based Continental Bank. It became the fastest-growing de novo bank opened in the four years before the crisis and was sold in 2014 to Bryn Mawr Bank Corp., a $4.5 billion bank in neighboring Bryn Mawr, Pennsylvania. And since 2007, Wycoff has been a managing partner at Patriot Financial Partners.

Wycoff shared his perspective as a private equity investor on the M&A landscape with Bank Director at its latest Acquire or Be Acquired conference, held earlier this year at the Arizona Biltmore resort in Phoenix, Arizona. Wycoff’s perspective is one of five Bank Director has cultivated about the M&A landscape following the annual conference.

“I’ve been coming here for 24 years, both for the industry data that the presenters present and for the ideas on how to improve my companies,” says Wycoff. “I was a CEO the first 13 years I came here, so I used a lot of the ideas I picked up to improve the banks I was running. Since I’ve been an investor for the last 11 years we’ve been meeting our banks here, encouraging some of our banks and their boards to come here to learn about mergers and acquisitions, about concepts around accretion and dilution, about governance and the whole process of, if you need to do something strategically, how to do it right.”

Wycoff has a unique perspective on the relationship between profitability and M&A activity. The typical assumption is that higher profitability will spur transactions. It’s at the top of the cycle, after all, when buyers are flush with cash and sellers salivate at the prospect of high valuations. But Wycoff thinks there’s another way to look at this.

People should think about the value of their bank as if M&A didn’t exist,” he says. “When banks return 15 percent on equity, which they’re on their way to doing, M&A becomes a much less necessary part of the plan because at that rate you’re going to double your capital every six years.”

Given the salutary impact of last year’s tax cuts, combined with the favorable operating environment, the industry could soon find itself in this situation. “As an investor, what struck me at this year’s conference is how good things are,” says Wycoff. “We’ve been in a very, very good credit environment, the industry has tremendous amount of capital, people are very optimistic and earnings are going up because of the tax bill.”

It’s in times like these that investors and board members need to avoid being lulled into a false sense of security, says Wycoff.

“CEOs will tell boards they deserve bonuses based on more earnings from tax reform when they maybe didn’t drive deposits or customer engagement or more margin.” Wycoff’s point is that now isn’t the time to become complacent. Instead, banks should be vigilant about operating expenses.

As an investor, Wycoff is also watching the evolution of bank stock ownership. The proliferation of exchange-traded funds and robo-advisors could detach bank valuations from fundamental performance, says Wycoff. This would create arbitrage opportunities for savvy investors, but it would break the feedback loop between the market and executives running banks. “That’s difficult because you like to think as a CEO or an investor that if a company does the right things, you get rewarded in your stock price.”

Fuller coffers also raise the importance of capital allocation. Should rising profits be used to increase dividends, accelerate stock buybacks, invest in the business or a combination of the three? That’s the question, notes Wycoff. “I hope that this additional profitability, which will inevitably drive stock prices higher for the banks that are doing well, isn’t frittered away on things that don’t create long-term value for shareholders.”

Emerging M&A Trends: What To Expect



Deposits promise to be the hot topic for the banking industry in 2018, but more was revealed at Bank Director’s 2018 Acquire or Be Acquired conference about growth trends and M&A for U.S. financial institutions. While many banks are seeking to buy, not all banks are attractive partners. Further, bank stock valuations have had a significant impact on the M&A marketplace. Bank Director CEO Al Dominick provides an analysis of these issues in this video, including what potential buyers and sellers can expect this year.

  • The Importance of Deposits
  • Dynamics Driving the Industry
  • Bank Stock Pricing
  • Buyer & Seller Expectations

Acquire or Be Acquired Perspectives: Negotiating the M&A Landscape


merger-4-6-18.pngAsbury, John.pngThis is the first article of a five-part series that examines the bank M&A market from the perspective of five attendees at Bank Director’s Acquire or Be Acquired conference, which occurred in late January at the Arizona Biltmore resort in Phoenix.

Read the perspectives of other industry leaders:
Gary Bronstein, a partner at Kilpatrick Townsend & Stockton LLP
Eugene Ludwig, founder and CEO of Promontory Financial Group
Kirk Wycoff, managing partner of Patriot Financial Partners L.P.


The number of mergers and acquisitions in the bank industry over the last two years had been on the decline. A total of 196 unassisted mergers were consummated in 2017 compared to 223 in 2016 and 264 in 2015, according to the Federal Deposit Insurance Corp. Yet, with the recent tax cut and regulatory changes this trend could soon reverse course, suggests John Asbury, president and CEO of Union Bankshares, a $13 billion asset bank based in Richmond, Virginia.

I think [M&A activity] is picking up and I firmly believe that we’re going to see more consolidation,” Asbury said at Bank Director’s Acquire or Be Acquired conference in Phoenix, Arizona, earlier this year.

Asbury, who became CEO at Union in October 2016, is executing a growth strategy that balances acquisitions and organic growth. The opportunity to gain insight into the M&A market is why Asbury and hundreds of other bank CEOs, senior executives and board members attend Acquire or Be Acquired every January in Phoenix. “The reason I come and the reason why we have others come is really just the opportunity to see what the contemporary issues are,” says Asbury. But “the networking is off the charts. I think that’s important and not to be underestimated.”

The bank industry will never return to the salad days of consolidation in the mid-1990s, right after the barriers to branch and interstate banking came down. Yet, the conditions for further consolidation remain present, given the inherent advantages of scale in a highly commoditized industry with nearly 6,000 banks and savings institutions.

The U.S. Senate recently passed legislation that could provide modest regulatory relief to banks, and a more accommodative regulatory regime will fuel this in the short run, predicts Asbury. This is particularly true for potential acquirers that sit just below $10 billion assets, as Union Bankshares did until completing its purchase of Xenith Bancshares earlier this year.

“When you go over $10 billion in assets, several things happen,” says Asbury. “The most punishing aspect of it is the Durbin Amendment of the Dodd-Frank Act. The Durbin amendment caps our debit card interchange income, literally cutting it in half. For Union, that’s about a $10 million dollar a year revenue loss.”

The other threshold to watch is the one at $50 billion in assets, says Asbury, over which banks are considered to be systemically important and must submit to an even more stringent regulatory regime. The Senate bill would raise this threshold to $250 billion. “If it’s not as punishing for a bank to be over $50 billion dollars, I think you’re going to see [banks near it] become quite active.”

Size also comes into play in a less direct way that could impact smaller banks’ approach to deal-making. For years, large banks focused on acquisitions as their principal growth strategy. But now that JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. are prohibited from making additional acquisitions, as they already exceed the 10 percent nationwide deposit cap, they have turned inward for expansion, focusing instead on organic growth.

This changes the calculus for smaller banks in two ways, says Asbury. In the first case, community banks will no longer benefit from the customer attrition that large banks experienced in the wake of mergers and acquisitions. Additionally, because big banks are turning inward and pegging their growth strategies to the quality of their products and services, especially when it comes to technology, the value proposition of community banks, which traditionally revolved around better service, will be less effective at fueling growth.

It’s no longer as easy to pick up customers that are being run out by the big banks because of M&A,” says Asbury. “That’s why you’re seeing consolidation going on in our industry among the smaller players. It’s not just the regulatory regime; it’s also the ability to be relevant. The greatest risk to this industry, banks of any size, but particularly the smaller ones, is the risk of irrelevance. You’ve got to have sufficient scale. You’ve got to have a competitive product offering.”

Asbury points to Union’s recent move to hire a head of digital strategy. “You’re unlikely to find someone in that role at a much smaller institution because they probably don’t have the resources to be able to afford the role or to be able to afford executing a strategy around digital.”

As a result, Asbury predicts that the industry will continue to see mergers of equals among banks in the $500 million to $1 billion range, creating $2 billion to $3 billion banks.

An added benefit to combining banks of that size is it creates a more attractive takeout target. “One of the questions that I was asked [as a panel member at this year’s Acquire or Be Acquired] is how small is too small. I said in general under $1 billion is hard for us to think about because there are bigger fish to fry. We don’t want to be sidelined digesting a small opportunity when there’s a more strategically important larger opportunity around.”

Union is clearly in an acquisition mode, and Asbury says that banks looking for a buyer need be realistic when it comes to price. “There’s a lot of take-out premium on some of these smaller companies,” he says. “[It’s already] embedded in their stock. So I think it’s not realistic for management of these smaller banks…to expect a further premium on top of that.”

Legal Protections for Acquiring Banks



Due diligence just doesn’t tell an acquiring bank everything that should be known about a target—the process also shows that the acquirer’s team is committed to the deal. In this video, Stinson Leonard Street Partner Adam Maier explains how to protect the bank from potential losses in M&A.

  • The Roles of Due Diligence vs. Representations and Warranties
  • Addressing Risks Found in Due Diligence
  • Protecting the Buyer from Financial Loss

The Evolution of Regional Champions



Over the past decade, regional champions have emerged as strong performers in today’s banking environment, entering new markets and gaining market share through acquisitions. In this panel discussion led by Scott Anderson and Joe Berry of Keefe Bruyette & Woods, John Asbury of Union Bankshares, Robert Sarver of Western Alliance Bancorp. and David Zalman of Prosperity Bancshares share their views on strategic growth opportunities in the marketplace, and why culture and talent reign supreme in M&A.

Highlights from this video:

  • Characteristics of Regional Champions
  • Identifying Strategic Opportunities
  • Why Scale Might Be Overrated
  • Lessons Learned in M&A
  • What Makes a Good Acquisition Target

Video length: 41 minutes

 

Gonzo Views on Banking


In this series of videos, Steve Williams and Scott Sommer of Cornerstone Advisors interview industry leaders for their views on the capital investments that banks should make in today’s bull market, how to position the bank to excel after the deal is done and how acquirers should approach technology contracts early in the M&A process.

A Witness to M&A History


merger-1-28-18.pngWhen Bank Director hosted its first Acquire or Be Acquired conference in 1994, there were 12,604 banks and thrifts in the U.S., according to the Federal Deposit Insurance Corp. As of the third quarter of 2017, which is the FDIC’s most recent tally, there were 5,737 banks and thrifts—a 54.5 percent decrease. That is a stunning reduction in the number of depository institutions over this period of nearly two and a half decades, and the Acquire or Be Acquired conference has been a witness—and a chronicler—of it all.

This year’s event will kick off on Sunday, January 28 at the Arizona Biltmore Resort in Phoenix. By my count, I have attended 18 of these conferences, and the things we have discussed while we were there have changed over time and are always a reflection of the times. In the early 2000s, when the U.S. economy was strong and big banks were still in the game, we focused on the dealmakers who were building banking empires and taught the fundamentals of putting together a successful M&A transaction. During the depths of the financial crisis, when there wasn’t much M&A activity going on as many banks were more focused on shoring up their shaky balance sheets, and some were taking money from the Treasury Department’s Troubled Asset Relief Program, we talked a lot about strategies for raising capital. And since the few transactions during that period tended to be government-assisted deals with the FDIC, we offered advice on how to do those successfully.

More recently, as the industry’s financial health has returned, capital levels have improved and there are no longer many broken banks to buy, we have focused on the mechanics of buying and selling healthy banks. For many banks today, M&A has once again become the centerpiece of their strategic growth plans. However, we have also expanded the conference’s focus in recent years by adding general sessions and workshops on a broad array of topics including financial technology, lending, data, interest rates and deposits. The decision to buy or sell a bank is rarely made on the strength of the deal price alone, but is driven by these and other critical business considerations. We have tried to account for that broader perspective.

An issue that has been an underpinning to Acquire or Be Acquired from its very beginning has been the banking industry’s consolidation, a trend that dates back to at least the early 1980s. Last year there were 261 healthy bank acquisitions, according to S&P Global Market Intelligence, compared to 240 in 2016 and 278 in 2015. The outlook for 2018 is good, based on the rise in bank stock valuations following the enactment of a tax reform law that drastically cuts the corporate tax rate. With a stronger currency in the form of a higher stock price, acquirers should have an easier time putting together deals that are attractive to their own shareholders. It’s a fool’s game to predict the number of transactions in any given year (and a game that I have played, foolishly and without much success, in years past), but I would expect to see deal volume this year somewhere in that 240 to 278 range, which has come to represent a normalized bank M&A market in recent years.

Whatever the deal count in 2018 turns out to be, the banking industry’s consolidation rolls on, and the Acquire or Be Acquired conference will continue to be a witness to history.