Introduction

Large Bank Acquisitions of 2023

Large Bank Acquisitions of 2023

In addition to some very high-profile bank failures, 2023 witnessed several other large bank mergers and acquisitions, in spite of "supposed" increased scrutiny on these combinations.

Some of the largest can be found on page 5 of this week's  issue of Jumbo Rate News.  You will also discover at least one bank that grew its assets exponentially while flying under the radar with several smaller acquisitions.

The fifty banks noted grew their assets between $167 million and $96 billion (or from 4% to 260%) in the 12 months ending September 30, 2023.

Large Bank Acquisitions of 2023

We reported last week that 86 U.S. banks were lost to merger or acquisition during the first three quarters of 2023. Considering there is “more scrutiny” of big bank mergers, 2023 saw several large bank combinations (plus 5 failures).

The list on page 5 was compiled using September 30, 2023 financial data and while that is the latest available, it eliminates one of the largest bank mergers of 2023—that of the $9.2 billion asset 5-Star Banc of California and the $36.7 billion asset 3-Star Pacific Western Bank.

Better known as PacWest, Pacific Western was among several banks that got into trouble last spring. In the first nine months of 2023, as 20% of its deposits fled, it was posting sizable losses and facing a liquidity crunch. Unlike some of its peers, however, PacWest never reached the point of no return.

In preparation for the merger, the two banks combined sold over $2 billion in securities as well as Banc of California’s $1.8 billion residential mortgage portfolio. Proceeds from these sales will be used to quell PacWest’s liquidity issues and should serve to put the combined bank in a favorable financial position.

The merger was completed on December 1st, but full integration could take several months. The surviving charter will be that of Pacific Western Bank’s but the name will be Banc of California.

Another large bank combination of 2023, was the February acquisition of the $92 billion asset 5-Star Bank of the West (another California bank) by the $260 billion asset 5-Star BMO Harris Bank of Chicago. After the acquisition, BMO dropped Harris from its name and is now known simply as BMO Bank N.A.

With this transaction, BMO Bank, and its parent, Bank of Montreal, increased their U.S. presence by 500 branches and commercial and wealth offices. BMO Bank is now the 14th largest bank in the U.S. with over 1,000 branches in 24 states. Its parent, Bank of Montreal is now the 8th largest bank holding company in North America.

That transaction, however, was dwarfed in May by yet another California bank acquisition. The $100 billion asset 4-Star MUFG Bank, San Francisco, was acquired by the $590 billion asset 5-Star U.S. Bank, Cincinnati. In addition to bolstering U.S. Bank to the fifth largest bank (by assets) in the nation, the transaction also aided in bringing U.S. Bank up from a 4-Star to a 5-Star Bauer rating.

While U.S. Bank remains $1 trillion short of the nation’s fourth largest bank, 4-Star Citibank, N.A., it now has $100 billion more in assets than the #6, 4-Star PNC Bank. This transaction was also included last year (JRN 40:02) because the acquisition of the parents took place in Dec. ’22. The banks however, were not combined until May 2023.

That’s the problem with not having the official data through the end of the year—the final dates aren’t, well, finalized. That transaction was so big, it deserves to be listed twice anyway. Why is it only in the #2 slot on page 5? Because... after increasing its assets by nearly $80 billion in the second quarter of 2023, about $12 billion of that gain was lost again in the third quarter. Easy come easy go.

That brings us to the March 2023 acquisition of the $20 billion asset 5-Star Columbia State Bank, Tacoma, WA  by the $32 billion asset 4-Star Umpqua Bank, Lake Oswego, OR. Boasting total assets of $52 billion, Umpqua Bank is now the third largest bank headquartered on the West Coast.

The history of 5-Star HTLF Bank, Denver, CO and its parent, Heartland Financial USA, Inc. can be described as a snowball gathering speed and girth as it rolls down hill. HTLF Bank is not on page 5 because it made a large acquisition last year. It is there because it made six smaller acquisitions that added up. This after acquiring four banks in 2022.

As it works to meld all of these new arms into a cohesive entity, HTLF Bank is still operating under six of the previously acquired names in addition to its primary, HTLF Bank, name.

These are the banks it acquired in 2022 and 2023—after Citywide Banks changed its name to HTLF Bank (June 2022):

In less than a year and a half, HTLF Bank has grown to six times the size it was at June 30, 2022. With 260% growth in 2023, HTLF Bank had, by far, the largest percent increase in assets in 2023. And, if you notice, every bank it acquired is in a different state. Scrutiny? We see none.

That’s the problem with not having the official data through the end of the year—the final dates aren’t, well, finalized. That transaction was so big, it deserves to be listed twice anyway. Why is it only in the #2 slot on page 5? Because... after increasing its assets by nearly $80 billion in the second quarter of 2023, about $12 billion of that gain was lost again in the third quarter. Easy come easy go.

That brings us to the March 2023 acquisition of the $20 billion asset 5-Star Columbia State Bank, Tacoma, WA  by the $32 billion asset 4-Star Umpqua Bank, Lake Oswego, OR. Boasting total assets of $52 billion, Umpqua Bank is now the third largest bank headquartered on the West Coast.

The history of 5-Star HTLF Bank, Denver, CO and its parent, Heartland Financial USA, Inc. can be described as a snowball gathering speed and girth as it rolls down hill. HTLF Bank is not on page 5 because it made a large acquisition last year. It is there because it made six smaller acquisitions that added up. This after acquiring four banks in 2022.

As it works to meld all of these new arms into a cohesive entity, HTLF Bank is still operating under six of the previously acquired names in addition to its primary, HTLF Bank, name.

These are the banks it acquired in 2022 and 2023—after Citywide Banks changed its name to HTLF Bank (June 2022):

List of banks acquired by HTLF between June 2022 and December 2023

In less than a year and a half, HTLF Bank has grown to six times the size it was at June 30, 2022. With 260% growth in 2023, HTLF Bank had, by far, the largest percent increase in assets in 2023. And, if you notice, every bank it acquired is in a different state. Scrutiny? We see none.

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We reported last week that 86 U.S. banks were lost to merger or acquisition during the first three quarters of 2023. Considering there is “more scrutiny” of big bank mergers, 2023 saw several large bank combinations (plus 5 failures).