Extended closing timelines still plaguing US bank deals

Extended closing timelines are still plaguing US bank deals as regulatory approvals drag.

Several US bank deals remain pending beyond their original estimated closing time frames and above the 162-day median for US bank deals to close over the last 12 months, forcing some to extend their closing time frame expectations or even terminate their transactions.

Extended closing periods

Provident Financial Services Inc.'s $1.26 billion acquisition of Lakeland Bancorp Inc. — the largest pending US bank deal right now — was expected to close by June 30. The deal was announced Sept. 27, 2022, and remains pending over 370 days later.

Currently, Provident is engaging in "regular, productive discussions with our regulators and we remain hopeful that the deal will close in the fourth quarter of this year," the company said in a statement to S&P Global Market Intelligence.

Lakeland echoed the sentiment in a separate statement, saying the companies are making "significant progress" on integration and are engaging with regulators in hopes the deal can close this year.

Prosperity Bancshares Inc.'s $226.4 million purchase of Lone Star State Bancshares Inc. just recently passed its expected closing time frame. The Texas-based banks announced their tie-up Oct. 11, 2022, at the same time Prosperity announced its acquisition of First Bancshares of Texas Inc. The First Bancshares of Texas deal closed May 1, but the Lone Star deal is still pending nearly 360 days later.

Prosperity and Lone Star did not respond to requests for comment on updated deal closing time frames.

In July, Prosperity said during an earnings call that the hold-up was at the Justice Department, but the company had recently received clearance from the agency to keep a branch located in a town of 9,000 people.

After that, the company thought, based on contact with the Federal Deposit Insurance Corp., that they "would get it done in just a few days," Senior Chairman and CEO David Zalman said. "It's taken longer than that because now most everything — even of the size of it and the small size of it — it still has to go to Washington."

"But we're really hoping to get it. We should get it," Zalman added.

Other banks still awaiting regulatory approval have pushed out their expected closing timelines from what they originally guided at announcement.

When LINKBANCORP Inc. and Partners Bancorp announced their $161.5 million merger of equals in February, they expected the deal to close in the third quarter. But in July, the companies announced that they amended their expectations to either the third quarter or the fourth quarter.

Terminations

Seven US bank deals have been terminated this year, with the terminated deal values totaling $13.84 billion. Some banks ended up terminating their deals after facing long and uncertain regulatory approval timelines.

The largest termination this year was The Toronto-Dominion Bank and First Horizon Corp.'s $13.67 billion tie-up. The companies vacated the merger agreement due to a lack of insight into when the deal could secure regulatory approval.

RBB Bancorp and Gateway Bank FSB mutually terminated their transaction Sept. 28, 639 days after it was announced on Dec. 28, 2021. The companies did not provide a reason for the termination in the press release, but Piper Sandler analyst Nathan Race believes it was due to the "myriad of corporate governance and legal matters ... that has plagued RBB since early 2022," he wrote in a note.