5 Regional Bank Acquisition Candidates
Merger and acquisition (M&A) activity has been put on pause in most industries, and banking is certainly no exception. However, Tom Michaud, president and CEO of Keefe, Bruyette & Woods (KBW), a bank research firm and investment bank, recently said on CNBC's The Exchange that he expects M&A activity -- which was occurring at a high rate in the banking industry prior to the coronavirus -- to resume once economic conditions calm down. Notably, Michaud said to look at price-to-tangible-book (P/TBV) valuations to get an idea of the buyers and sellers, with those banks that have high P/TBVs being positioned to buy and those with lower P/TBVs being potential acquisition candidates.
Tangible book value shows the value of a company if it were going out of business and had to liquidate all of its assets. It excludes goodwill and other intangible assets because they can't be converted into assets of value during a liquidation event. While the market is volatile and valuations seem to constantly be changing, I examined the P/TBVs of most of the large regional banks ranging from $40 billion in assets all the way to nearly half a trillion in assets to better understand the M&A landscape right now.
I previously took a look at some of the potential buyers, but now let's take a look at some of the banks trading at cheaper discounts, which therefore could be acquisition candidates.
Source Fool.com
