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SNL Center for Financial Education
FOR IMMEDIATE RELEASE
October 8, 2004
 FOR MORE INFORMATION, CONTACT:
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SNL Financial says third-quarter M&A Deal value dipped across the financial services sector

Bank price/book ratios continue to trend up while insurance and specialty finance drop

CHARLOTTESVILLE, VA. -- Deal value decreased in the financial services sector in the third quarter while volume was mixed with bank and specialty finance deals up but insurance and specialty finance deal volume on the decline, according to SNL Financial.

Banking M&A deals announced during the period totaled 71, about on par with the year ago quarter's 68, but well above the prior quarter's 59. Volume by total deal value declined 74% to $9.6 billion from $36.5 billion in the previous quarter, but more than doubled the year ago period’s $4.2 billion.

The largest single transaction was TD Bank Financial Group’s $3.8 billion offer for Banknorth Group Inc. (NYSE: BNK). The second largest transaction of the period was a $1.5 billion offer for First National Bankshares of Florida Inc. (NYSE: FLB) by Fifth Third Bancorp (NASDAQ: FITB). The third largest transaction of the period was the $850.0 million offer for Laredo National Bancshares Inc. by Banco Bilbao Vizcaya Argentaria SA.

Offers averaged 232.4% of book compared to 217.7% in the previous quarter and 205.0% in the year ago period. On a price to earnings basis, deals posted a median 24.5x, compared with 22.1x in the previous quarter and 20.9x in the year ago period.

Securities and Investments deals slowed during the 3rd quarter with 27 deals announced compared to last quarter’s 38 deals but up slightly from the year ago quarter’s 23 deals.

Securities and Investments deal value fell more than 60% to $984.5 million from last quarter’s $2.6 billion and decreased 76% from the year ago quarter’s $4.1 billion. The quarter’s largest deal was PNC Financial Services Group Inc.’s (NYSE: PNC) agreement to acquire SSRM Holdings Inc. from MetLife Inc. (NYSE: MET) for about $460.0 million.

Specialty Finance deal number increased 15% to 38 deals from last quarter’s 33 deals and 73% from the year ago quarter’s 22 deals.

Deal value for this sub sector increased slightly during the 3rd quarter, finishing at $2.6 billion compared to $1.8 billion last quarter. The 3rd quarter’s $2.6 billion deal value was extremely low compared to year ago quarter’s $12.0 billion. The quarter’s largest deal was General Electric Co.’s (NYSE: GE) agreement to purchase the credit card operations of Dillard National Bank from Dillard’s Inc. (NYSE: DDS) for about $850.0 million.

The number of insurance deals announced declined 21% to 58 deals from last quarter’s 73 deals and was down almost 35% from the year ago quarter’s 89 deals.

Deal value decreased 81% to $1.3 billion from last quarter’s $6.5 billion and was down 92% from the year ago quarter’s $14.9 billion. The quarter’s largest deal was PacifiCare Health Systems Inc.’s (NYSE: PHS) $506.7 million agreement to purchase American Medical Security Group (NYSE: AMZ).

Average price/ book for specialty finance for this quarter was 107.5%, down from the 150.4% posted in the 2nd quarter and 144.3% in the year ago quarter. Average price/ book for insurance for this quarter was 199.9%, compared to 214.8% last quarter and 96.9% in the year ago quarter.

About SNL Financial

SNL collects, standardizes and disseminates all relevant corporate, financial, market, and M&A data — plus news and analysis — for the Banking, Financial Services, Insurance, Real Estate, Energy and Media & Communications industries. For more information, visit www.SNL.com.