On the PGA Tour, it’s called “The Silly Season.”
It’s the time from October through December when the veterans stop showing up for events unless someone backs a dump truck full of money to their front yard, and the tournament leaderboards are filled with names you’ve never heard of even if you’re a golf dork like me.
In the banking season, that time is now. When Metro Bancorp’s annual shareholder meeting ended Friday — later than usual because of all the behind-closed-doors negotiations that were going on in the 11th hour — it marked the last shareholder meeting of the year for local banks, effectively bringing to an end the full year of the highly active banking season that might not get revved up again until the second-quarter earnings reports start dropping in mid-July.
Now it’s likely time for banks to take a breather from all the M&A activity we saw over the last year or so and start plotting a course for the next 12 months.
So let’s use this opportunity to take stock and make four wild predictions for the next 12 months of the Central Pennsylvania banking M&A activity:
1. Metro will not be sold in the next year. If there is one phrase I’ve heard more than any other in the last 12 months, it’s this: Banks are bought, they’re not sold. You’re dealing with some of the world’s smartest financial people in the banking industry, and you can’t get one over on them. It’s not like general managers foaming at the mouth waiting to fleece Ruben Amaro Jr. at the trade deadline. Yes, there are some very big stakeholders in Metro who want it sold. But yes, Metro is, and has been, a very profitable bank for the last two years, so its board won’t be firesaling at the drop of a hat. Until someone comes along with a “Godfather” offer — like the one S&T made to Integrity — Metro will be staying put. And if it hasn’t happened by now, it’s probably not coming on the horizon.
2. A small, local bank will be sold to a larger local bank. When I say small, I’m talking $300 million to $600 million in assets — and we’ve only got a couple of those (like Centric, Riverview and York Traditions). And when I say larger, I’m talking around $1 billion in assets — and we’ve only got a few of those. $1 billion in assets is a weird place to be these days in the banking world, so I’m expecting a hyperlocal $1 billion bank (Orrstown is my odds-on favorite) to buy a smaller local bank to beef up its assets and allow it to either get noticed by a large bank or to acquire the necessary capital to continue buying smaller banks.
3. FNB isn’t done around here. The buy of Bank of America’s two Lancaster branches was a sign the Pittsburgh-based bank is very interested in beefing up its midstate presence. The bank clearly has its eyes here and would be interested enough in starting small (one of those $300 million to $600 million banks, perhaps?) that could let it be a local player. Same goes for Allentown-based National Penn.
4. PNC doesn’t want to buy anything around here. A couple weeks ago it came out that after years of PNC ignoring M&A, it might be ready to grab a bat and step into the box (no more sports analogies, promise). While the bank has a history of Central Pennsylvania acquisitions, I’m guessing it has no interest in any midstate-based bank. They’re all either too small, or too close to its own footprint (like Fulton), to deal with the headache of closing hundreds of branches. If it’s buying, I’m guessing it’s to enter a new market, not beef up any of its current footholds.
Feel free to add your big, wild, silly prediction in the comments …