This Day On The Street
Continue to site right-arrow
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

Stocks in this article: BAC WFC C

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

Select the service that is right for you!

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 18,088.00 +57.79 0.32%
S&P 500 2,091.38 +9.50 0.46%
NASDAQ 4,811.2280 +37.7560 0.79%

Brokerage Partners

Rates from

  • 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