The December 2013 issue of Bank Watch is available now, which features an article by Jay Wilson and Chad Giganti titled “Credit Marks on Acquired Loan Portfolios Trend Down During 2013.”
Merger related accounting issues for bank acquirers are often complex. In recent years, the credit mark on the acquired loan portfolio has often been cited as an impediment to M&A activity as this mark can be the most critical component that determines whether the pro-forma capital ratios are adequate. As economic conditions have improved in 2013, bank M&A activity has also picked up and we thought it would be useful to take a look at the estimated credit marks for some of the larger deals announced in 2013 (i.e., where the acquirer was publicly traded and the reported deal values were greater than $100 million) to see if any trends emerged.
The article includes a table of estimated credit marks during 2013. The downward trend reflects most notably the following factors:
- Improved economic trends
- Higher real estate values
- Reduced levels of noncurrent loans
In addition, three recent transactions are announced. This issue also includes a link to Mercer Capital’s newest quarterly industry newsletter, FinTech Watch.
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The December 2013 issue also contains links to various articles of interest, as well as public market indicators, M&A market indicators, and key indices of the top financial institutions in the U.S., providing insight into financial institution valuation issues.
For a complimentary subscription, click here.