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How rate hikes impact mergers

June 16, 2017

Recent midsize sellers have had a few things in common, such as good loan growth and high sale valuations, yet they also share a surprising similarity: an above-peer amount of noncore deposits.

Those deposits have not seemed to deter buyers, who continue to pay up for these franchises given their ability to grow loans and offer scale in desirable locations. Buyers anecdotally have viewed these funds with a wary eye, but recent deals indicate that sellers may offer attractive features beyond their funding base or an opportunity to roll off their higher-cost funds.

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