This Day On The Street
Continue to site
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

Bank M&A Complicated by Failures

If a bank does a non-assisted transaction "and the FDIC comes in and swoops up a bank in a similar market [with better franchise value], shareholders will be upset," says Ken Thomas, a Miami-based banking consultant and economist.

Lawrence Kaplan, a former senior lawyer at the Office of Thrift Supervision and currently part of law firm Paul, Hastings, Janofsky & Walker's banking and financial institutions group, says it's possible that one of the parties has balance sheet issues that come out during the regulatory review process, such as a worsening credit picture.

An acquiror's capital levels are a key concern for any deal and "if the regulators get spooked or have concerns, they could slow down the process" or impose conditions in order to approve the deal, which may not be suitable or appealing to the involved parties, Kaplan says.

Regulators are also paying more attention to the structure of the combined companies and/or controlling parties of these deals and digging into whether a buyer has the capacity and appropriate risk profile to purchase a target, Kaplan says. This is particularly important as private equity investors mull deals in the sector.

Two weeks ago, Royal Bancshares of Pennsylvania (RBPAA) canceled an agreement to sell its bank subsidiary to a private investor group because it could not secure sufficient capital to satisfy regulators.

In October, Frontier Financial (FTBK), which was being acquired by a SP Acquisition Holdings, a so-called blank check company, could not obtain regulatory approvals within its desired timeline, and the purchase was canceled.
3 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
FCVA $5.56 0.00%
C $37.41 0.00%
BAC $11.98 0.00%
OCFC $16.51 0.00%
WFC $46.17 0.00%


Chart of I:DJI
DOW 15,914.74 -99.64 -0.62%
S&P 500 1,851.86 -0.35 -0.02%
NASDAQ 4,283.5920 +14.8290 0.35%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs