In this presentation, Jay Wilson sheds some light on Credit Union acquisition of banks, which represent roughly 5% of whole bank transactions in 2019 and 2020. He dives into valuation lessons he has learned through his experience valuing banks for acquisition by credit unions

Against a backdrop for an active bank M&A environment, we consider the top three factors that, in our view, should be considered by bank acquirers to help make a successful bank acquisition: Developing a Reasonable Valuation Range for the Bank Target; Appropriately Consider the Strategic Fit of the Bank Target; and Evaluating Key Deal Metrics Implied by the Bank Acquisition.

Mercer Capital previously published articles on core deposit trends in August 2020 during the early stages of the pandemic and again in August 2021. In those articles, we described a decreasing trend in core deposit intangible asset values. In response to the pandemic, the Fed cut rates effectively to zero, and the yield on the benchmark 10-year Treasury reached a record low. While many factors are pertinent to analyzing a deposit base, a significant driver of value is market interest rates. As shown below, we find ourselves in a very different interest rate environment today.