An overview and analysis of community bank mergers

With some of the largest mergers in history now taking place in the financial services industry, it is easy to overlook the fact that industry consolidation involves small institution mergers as well as megamergers. The factors that are promoting consolidation among larger banks are also relevant for the smallest banks: the liberalization of bank branching and interstate banking rules; the need to spread the cost of technological and administrative overhead; and the desire to maintain earnings growth. In the region covered by the Tenth Federal Reserve District, smaller banks, particularly those in rural areas, are subject to many of these pressures to an even greater degree than larger banks and banks in metropolitan areas.1