Acquire Or Be Acquired?

February 10, 2020

By: Robert T. Smith

Recently I attended the Bank Director “Acquire or Be Acquired” Conference in Scottsdale, Arizona. The conference is an annual event updating attendees on the state of the financial industry mergers and acquisitions market.

It was interesting to hear the thoughts of a number of great speakers regarding the current environment and what to expect for 2020. While a multitude of issues were discussed, the following three factors were consistently identified as the primary drivers of mergers and acquisitions transactions in the current market:

  1. Succession Planning. Planning (or lack thereof) for the next generation of bank leadership remains as a significant issue for community banks. The aging of boards and shareholders continue to serve as a motivation for many banks to seek out acquisition partners. This is an issue faced by many rural banks in Arkansas and I except that it will continue to spur M&A activity going forward.
  2. Low-Cost Deposits. Certainly not surprising to hear, but a number of speakers noted that a significant consideration in any acquisition is the desire to capture low-cost core deposits. These funding considerations will no doubt continue to drive deals in 2020.  
  3. IT Costs and Fintech Competition. Rising technology costs also lead many smaller institutions to reconsider remaining independent. The pressure is also mounting with increased competition from non-bank financial service providers. Several speakers encouraged banks to not be afraid to take some risks with technology offerings provided that you are partnering with a reputable fintech vendor – noting that enhancing the customer experience is of utmost importance. 

    Our firm is fortunate to work with community banks and holding companies on M&A, securities, regulatory and corporate matters throughout Arkansas. 

    For more information on the matters discussed above, or to request assistance on any other legal issues, please contact Robert Smith in our Finance and Commercial Transactions practice group at (501) 370-1559 or [email protected]

    Robert T. Smith heads the Finance and Commercial Transactions Practice Group and serves on the firm’s Management Committee. His diverse corporate practice focuses on representing companies and financial institutions in general business, transactional, securities and regulatory matters. He has handled transactions in a variety of areas including the banking, healthcare, real estate and technology industries.

    Disclaimer: The information included here is provided for general informational purposes only and should not be a substitute for legal advice nor is it intended to be a substitute for legal counsel. For more information or if you have further questions, please contact one of our Banking and Finance Attorneys.