Kamal Mustafa, founder and CEO of Invictus Capital Group.
California may be one of the nation's few sellers' markets for community banks over the next few years, according to Kamal Mustafa, CEO of Invictus Consulting Group.
The New York firm, which conducts stress tests on banks based on the quarterly data provided to regulators, says that the need for capital by weak banks nationwide exceeds the amount of capital held by stronger banks, a situation not seen since the Great Depression. In other words, some of the weak banks will eventually be closed by regulators, Mustafa says.
Mustafa, former head of Citibank's (NYSE: C) M&A practice, declined to publicly identify banks landing on his list of those having to sell. But he captured the state of M&A he sees ahead for community banks in his report titled "Buyers and Bleeders."
"While M&A transaction volume has been muted to date, we believe that an increase in activity in a buyers' market is in development," Invictus said of the national M&A market taking shape.
The San Francisco Business Times, in partnership with Crowell, Weedon & Co. and SNL Financial, offers a database of information from the FDIC on the health of all banks operating in California.
Banks in the Golden State are faring better than their national counterparts.
Mustafa says California has 53 banks that must or should sell and 137 that must or should buy another bank, which means there's 2.6 potential buyers for every potential seller, compared to a ratio of 1.9 nationwide. In Northern California, which includes San Francisco, Oakland, San Jose, Sacramento and Fresno, there are 58 potential buyers and 26 potential sellers, creating a ratio of 2.2 to 1.
Mark Calvey covers banking and finance for the San Francisco Business Times.
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