Oct. 19 — Bank merger and acquisition fever keeps rising — prompted by an amalgam of developments.
Recent court rulings, changes in state banking laws, dramatic economic growth in some regions and a slowdown in others, growing financial and competitive pressures on small banks, and the anticipation of interstate banking have all contributed to a significant rise in merger and acquisition activity in the first six months of this year over the same period in 1980.
And although most of those deals involved small banks, some observers see a trend toward bigger, more daring, and sometimes more acrimonious transactions.
Those conclusions are based on an analysis of merger and acquisition.
applications received by the banking agencies during this period, a review of recent announcements, and interviews with dozens of bankers, regulators, analysts, and consultants around the country.
In the first half of 1981, the Federal Reserve Board received 111 applications from bank holding companies seeking to acquire additional banks, a 37% increase over the 81 received through June 30 of last year. About 22% of the filings involved a proposed new bank. Similarly, the Fed, the Federal Deposit Insurance Corp., and the Comptroller of the Currency received a total of 69 new merger requests in the first six months of 1981, one-third more than in the corresponding period in 1980.
The Federal Reserve acts on all bank holding company acquisitions, whereas the Comptroller, Fed, and FDIC review merger applications from national banks, state-chartered member banks, and state-chartered nonmembers, respectively.
Activity Confined to Few States
Most of the new activity was confined to a few states. Although the numbers themselves were not always large relative to the total number of banks in each state, sharp increases in mergers and acquisitions occurred in Texas, Colorado, Connecticut, Maryland, and Alabama. Acquisition activity also remained strong in Michigan, Missouri, Iowa, Wisconsin, and Ohio.
Although most of the merger filings from Florida institutions earlier this year concerned internal consolidations, the pace of merger proposals involving the state's largest bank holding companies has accelerated dramatically in recent months. And in at least two recent instances, the takeover attempts have been unfriendly.
Most of the latest filings from New Jersey and Virginia were intended to achieve internal consolidations or branch sales. Despite the inclusion of this internal activity in the application data, these figures are probably the best available leading indicator of bank expansion activity, for two reasons: first, they precede by as much as six months consummated mergers and acquisitions, and second, 96% of all filings are ultimately approved, according to a Fed official.
Many observers also attribute the increase in both numbers and size to what they believe is a more benign view of bigness by the courts, the Department of Justice, and other government agencies than may have existed in the past. As evidence of this shift in attitude, some observers cite two recent court rulings which ordered the Fed to reconsider its earlier denials of proposed bank holding company mergers in Texas and Missouri.
Merger Decision
In the Missouri case, involving a proposed merger between two St. Louis-based bank holding companies, the $325 million-asset Bancshares and $589 million-asset County National Bancorp, the court held last September that the Board had applied more stringent antitrust standards than were called for by federal law.
Then, in February, the Fifth Circuit Court of Appeals in New Orleans instructed the Fed to reconsider its rejection of an application by Mercantile Texas Corp. of Dallas to acquire Pan National Group Inc. of El Paso.
