Sweet Bank Deals of the Recent 21st Century

Dealscape has a list of the Top 7 bank deals of the 21st century:

No. 7. Jamie Dimon, Bank One Corp.  He deserves a higher ranking, but he’s had enough glowing praise lately. When Dimon sold Bank One in January 2004, he got $58 billion at a valuation of  2.7 times book value. All of it was in stock. But it was J.P. Morgan Chase & Co. stock, and it has risen 13% since then. The deal was good strategically and in terms of long-term shareholder value.

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No. 3. Stephen H. Gordon, Commercial Capital Bancorp. This Irvine, Calif., bank isn’t listed here because it sold out in April 2006 for $983 million, nor because it achieved a valuation of 3.1 times tangible book value, nor even because it accepted cash. It is named here because Gordon did not accept the stock of the buyer, Washington Mutual Inc. That $983 million would be virtually worthless today if he had.

No. 2. Walter A. Dods Jr., Community First Bankshares Inc. Fargo, N.D.-based Community First Bankshares was an illogical amalgam of tiny banks in 12 western states. Yet somehow in March 2004, the bank pried $1.2 billion from the clutches of BancWest Corp., a unit of BNP Paribas SA of France, for its far-flung network. That’s equal to 3.3 times book value, all of it in cash.

No. 1. Charles John Koch, Charter One. Koch hit a grand slam in 2004 when he sold his Cleveland-based bank to Royal Bank of Scotland Group plc. He sold for $10.5 billion — in cash. The valuation was 3.0 times book value. Fantastic. But here’s the most impressive thing. Sources told The Deal at the time that Koch shopped his bank and had a few offers, but RBS was the only one offering all cash. He declined stock offers from other Ohio banks, like Fifth Third Bancorp of Cincinnati and KeyCorp of Cleveland. Those shares have been massacred in the credit crisis.

These guys who sold their banks for cash before 2008 deserve gold medals and trophies. In general, it seems to me that selling a company for cash is vastly more preferable to a share exchange. And of course this is even easier to say looking back from the current financial crisis.