This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Bank M&A Complicated by Failures

"What's happening in the current environment [is that] the regulators are taking a lot longer to approve transactions [so there is] no chance creating a problem by approving a deal," says Brett Rabatin, a Sterne Agee analyst who covers Sterling Bancshares.

Other examples of deals that didn't make it to the finish line include the proposed hookup between OceanFirst Financial (OCFC) and Central Jersey Bancorp (CJBK); and plans for First Capital Bancorp (FCVA) and Eastern Virginia Bankshares (EVBS) to merge. Both deals were scuttled with parties citing delays in obtaining regulatory approval as a reason for the cancellations.

Chip MacDonald, a partner at law firm Jones Day specializing in banking and finance, says that even with "stresses in the system and all the proposed regulator changes, it's almost surprising there are not more" canceled deals.

Logic would seem to dictate that the troubled financial sector would see a pickup in consolidation in order to avoid escalating bank failures. But the extra scrutiny by regulators seems necessary given that currently 552 U.S. banks are considered so-called problem banks by the Federal Deposit Insurance Corp., thanks to the credit crisis. More than 200 banks are expected to fail in 2010.

These terminated deals and others, while not new to the banking landscape, are an added repercussion of the financial crisis that has virtually taken bank M&A off the table unless it's a purchase of a failed institution with the assistance of the FDIC. Some observers suggest that regulators are overwhelmed with the number of failed banks.

Then there's the inherent appeal of the FDIC-assisted transactions to consider as to why more hookups between healthy companies aren't getting done. Not only can an acquirer get branches and deposits on the cheap, but the government provides downside protection by sharing the exposure to whatever troubled assets the acquired bank holds.

2 of 6

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,943.57 +23.98 0.14%
S&P 500 1,983.04 +1.44 0.07%
NASDAQ 4,527.1820 -0.3320 -0.01%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs