Jim Dobbs

A.E.A. Federal Credit Union in Yuma said it would acquire West Valley National Bank in a bid to expand into Phoenix and Las Vegas.

Many banks tapped the brakes on mergers and acquisitions this year amid economic and regulatory challenges. But executives at banks with a history of dealmaking say conditions could be right for them to return to buying mode next year.

The island state's biggest banks — which reported lower profits in the third quarter — say it is too soon to fully assess the economic fallout from the deadly August wildfires. The rebuilding effort could boost near-term deposit growth and long-term loan demand, they said.

Amid intense regulatory scrutiny, market volatility and economic uncertainty, 10 bank M&A deals have been scrubbed so far this year after 13 were scuttled last year. Deal activity has risen slightly lately, but the new normal is hard to gauge.

The Indiana bank said it agreed to acquire CapStar Financial in an all-stock deal that would hasten its growth in Tennessee.

The Federal Reserve Board and state regulators signed off on the $1 billion deal, paving the way for a late 2023 closing. The approvals were significant given that other large combinations have run into trouble.

"We'll be taking steps to offset expense pressures," CEO Curtis Farmer told analysts after the company reported an 11% year-over-year jump in costs and falling profits.

The Tennessee bank said a $72 million charge-off tied to a borrower in bankruptcy shaved 10 cents per share off its earnings. Management downplayed the issue, calling it "idiosyncratic," and emphasized that it was growing its loan portfolio.

The Pittsburgh-based regional bank expects to save $325 million next year as it reduces its staff by 4%. Executives said the cuts are necessary because revenue has fallen amid a surge in interest rates and a decline in loan volumes.

Central Valley Community Bancorp's agreement to buy Community West Bancshares, slated to close in the second quarter, would create a $3.6 billion-asset bank in the Greater Sacramento region.

Lenders at an American Bankers Association conference this week railed against proposed regulatory requirements they argue could drive up costs, curb credit availability and ultimately hurt borrowers in already fragile economic times.

The world's biggest credit union will become the provider of banking services for U.S. armed forces members abroad, stepping into a void left by Bank of America. One credit union trade group is concerned that a potential deposit insurance snafu could threaten the program's viability.

The $23 million deal, signed in 2021 and initially projected to close in the second quarter of 2022, was delayed multiple times amid leadership turnover at the Los Angeles-based RBB.

Commercial real estate borrowers, including vulnerable office tower landlords, are increasingly struggling to make payments and, as a result, more lenders are expected to report higher credit costs.

A Piper Sandler poll found that 91% of respondents believe that either a mild or severe recession is already reflected in banks' shares. The survey also unveiled that market participants remain concerned mostly about credit quality and aftershocks from surging interest rates.

The parent companies of Cape Cod 5 and Fidelity Bank have agreed to combine under a multibank holding company called Mutual Bancorp. The bank units would keep their current names and operate independently but pool resources to improve efficiency.

Eighteen banks announced agreements to sell themselves last month. It was the most active month for bank deals since July 2022.

The combination would create a company with $27 billion of total assets, $18 billion of loans and $22.6 billion of deposits.

Lenders either write down portions of soured credits or charge them off altogether to remove them from their balance sheets. Banks also set aside reserves to cover potential future bad loans. This allowance creates a buffer for lenders to absorb losses.

Merchants Bancorp says it will sell a total of four branches to two buyers and focus more on its core residential mortgage lending business. Banks of all sizes have been pruning branch networks in recent years.