Community bankers have become so deeply involved in mergers and acquisitions that they, like their counterparts at bigger banks, have had to develop M&A specialties.

Mirroring what has happened on a larger scale at regional and superregional banking companies, the smaller fry "are trying to make it more of a process and dedicate more staff to it," said Joseph Stieven, a banking analyst at Stifel, Nicolaus & Co., St. Louis.

The reason: Mergers are increasingly seen as the key to competing against larger banks as well as nonbanks.

With the number of avowed sellers diminishing, bankers perceive that the window of opportunity for growth through mergers is closing. And CEOs are less hopeful that they can do what has to be done in their spare time or, as in the past, encounter willing sellers at the country club.

A growing number of community banks are no longer relying on the personal contacts and energies of their chief executive officers. They are either developing acquisition specialists internally or hiring people with experience elsewhere, typically at larger institutions.

By becoming more professional and systematic in their approach to merger strategy, community banks are aiming to get big enough to survive in the hotly competitive financial services market-or become attractive takeout targets themselves.

Suburban Illinois Banc Corp., Elmhurst, went outside the company to hire a mergers and acquisitions chief in December.

Established in 1976, the $220 million-asset holding company made its first-ever acquisition last year, a $13 million cash purchase of First Security Bank in Wood Dale. Elmhurst and Wood Dale are western suburbs of Chicago, a notoriously fragmented and consolidation-prone banking market.

Suddenly struck with takeover fever, Suburban hired William J. Potterton, retired vice president of correspondent banking at Harris Bankcorp in Chicago, as an executive vice president and director to oversee mergers and acquisitions. He brought with him years of valuable community- bank contacts.

"If you want to grow, you have to look into going into some other communities," said Josephine Chiappetta, another executive vice president at Suburban. "It's pretty difficult to locate a bank for a deal."

Ms. Chiappetta would not comment on Mr. Potterton's salary but said it was commensurate with his part-time status.

Community First Bankshares, Fargo, N.D., has considered acquisitions a priority since 1992 and staffed up accordingly. Its first acquisition hunter was a retired Colorado banker who helped the holding company crack that market, said chief executive officer Donald R. Mengedoth.

Community First, which has grown to $3.1 billion of assets from $700 million when it started prospecting, now has two part-time people and one full-time employee sniffing out deals.

Some banks look inside their ranks for acquisition specialists. West Coast Bancorp, Lake Oswego, Ore., gave the assignment to executive vice president Rodney B. Tibbatts.

The $712 million-asset company is the result of a merger of equals two years ago. Mr. Tibbatts was CEO of one bank and continued as a co-executive of the new entity until Feb. 1, when he stepped down to focus on corporate issues and development, investor relations, and external growth.

"I will be able to spend more time" looking for targets, he said. "As we grow as a company, the cost-effectiveness of acquisitions has to fit certain parameters.

Amcore Financial Inc., Rockford, Ill., started assigning senior, well- connected bankers to look for acquisition targets five years ago. The $2.9 billion-asset holding company has made five deals since then.

Charles Gagnier, president and CEO of Amcore's lead bank, currently oversees merger efforts.

"Having a person in that position has been helpful to keep the pipeline full and identify opportunities," said John Hecht, chief financial officer of Amcore. "If you want to get down-and-dirty serious about it, you need someone dedicated to it."

In the vast majority of community banks, finding targets is still up to the chairman and-or chief executive officer. But in the past, luck had more to do with successful deals than the gumption that seems an increasingly important ingredient today.

Jon Bruss, CEO of Fortress Bancshares, Hartland, Wis., is one of the go- getters. The $160 million-asset banking company was founded in 1991 on a strategy of growth through acquisition. It has made three purchases since then.

"Bank presidents are not very good about talking to other bank presidents about acquiring," said Mr. Bruss, a former investment banker. "It takes some time, and it takes a little moxie."

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.