Most community banks are searching for creative ways to not just improve their bottom line, but to grow! More than a third of community bankers who responded to this year’s ICBA Industry Report Card survey, plan to increase marketing budgets in 2014 while over half will maintain their 2013 levels. Many community bank board’s realize that their efficiency ratio is in the 70’s or higher, when they should be in the mid 60’s and are turning to third party vendors to help reduce overhead.
Industry observers expect continued consolidation, but it appears mergers are increasingly reflective of banks’ successful growth, rather than a function of bank failures. “It’s a healthy bank buying a healthy bank, rather than a healthy bank buying a sick bank,” says industry expert Tim Yeager, associate professor in finance at the University of Arkansas’ Walton College of Business as reported by the January issue of the ICBA Independent Banker.
Yeager point to data from the Federal Reserve, which tallied 188 bank mergers during the first seven months of 2013, 11% of which stemmed from failures of FDIC-assisted transactions. That’s compared with 456 mergers in all of 2010, 49% of which involved FDIC assistance or failed banks.
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