Page 26 - Banking Outlook 2014 - An Industry at a Pivot Point

24 | Banking Outlook 2014: An Industry at a Pivot Point

Price to Tangible Book Multiples Over Time

4.0x

3.5x
3.0x

2.5x

2.0x

1.5x
1.0x

0.5x

0.0x
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 LTM
2013
Money Center Banks
Source SNL Financial. Used with permission Regional Banks Small Banks
Banks looking to pivot their focus to growth cannot ignore the
opportunities presented in the M&A market—opportunities that
can not only expand their market share and geographic footprint,
but also, thanks to cost-saving synergies, free more resources for Generally P/B multiples still well below
finding new sources of revenue. Rigorous due diligence remains “
important, of course. Among other things, banks will want to precrisis levels (1.0x – 1.5x today vs. 2.0x –
make sure they understand any regulatory issues that could 3.0x precrises) The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International. NDPPS 227982
stall or block a transaction. They also will want to ascertain the ” © 2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in the U.S.A.
extent of any toxic assets buried on balance sheets, the level of
sophistication (or lack thereof) of a target’s IT systems, and the
extent of any accounting issues that might create a problem for the acquirer. And they will want to look for
any cultural-fit issues between themselves and their proposed partners.