ABA Banking Journal - July 2008 - (Page 18)
Community Banking Pass the Aspirin: Coping with rising gasoline prices p. 24 Time to sell your bank? Maybe. But can you? Today’s M&A market just plain stinks. In the meantime, you can take steps to prepare for M&A’s rebound (Bank and thrift combined) ry Lynn Lenz and her board faced a bittersweet choice. 90 Lenz had arrived at 48-year-old Slade’s 87 86 86 Ferry Trust Co. five years earlier, from a 82 large-bank background, and she had enjoyed the challenge of building up the 70 71 71 70 69 Somerset, Mass., lender. Slade’s Ferry, 66 publicly traded, had grown to $605 million-assets with decent profitability. But 54 50 she and the directors, strong believers in 51 strategic planning, had come to a tough 45 42 three-pronged fork in the road. Steady-as-you-go wouldn’t work. Projections indicated that the sheer num30 ber of competitors would make the costs of growing by even 5% “astronomical,” says Lenz. Yet pulling back and maximizing profits on the book of business the bank already had wasn’t too appealing, either. 10 “It wasn’t really a good marketing strat1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08 egy,” says Lenz. “Once you pull back, it’s very difficult later on to push back in.” That left the M&A route, with two prongs of its own: buying before the market got tough.” Lenz notes that the NASDAQ and selling. peer group for Slade’s Ferry Bancorp had declined approximateOnly a handful of Massachusetts institutions would have made ly 20% in the course of the deal. Had the bank remained indesuitable targets, and none looked likely enough to bank on. For pendent, says Lenz, the company by now would have been tradthe sake of shareholder value, board and banker agreed, it was ing below its book value. time to test the waters for sale, and the bank reached out to four Stuck in no man’s land prospective purchasers. In the end, Independent Bank Corp., parent of Rockland Trust Many boards entertaining similar discussions as those at the Slade’s Co., submitted the winning bid. The deal was announced Ferry board can’t currently do such a deal—they missed the boat. (We’ll talk about how to get ready for the next round later.) October 2007 and went live March 2008. The desire is there, for certain. “The $400 million-to-$1 billion “The timing was perfect,” says Lenz, “because it was done category is ‘no man’s land’,” says Don Musso, FinPro, Inc., By Steve Cocheo, executive editor Liberty Corner, N.J. Below $400 million, he says, a bank can 18 JULY 2008/ABA BANKING JOURNAL Subscribe at www.ababj.com COURTESY SHESHUNOFF & CO. INVESTMENT BANKING Ma Transactions by quarter
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