First Security Corp. These deals represented that merging was still possible in today's current bank consolidation trend. What made them possible were the private discussions between the respective CEO's of the two combining institutions and the significant social concessions such as sharing of power. Continued consolidation has minimized the number of bidders, and therefore, the transaction process has become more focused. Highvaluation companies with strong currencies are able to control the deals, and their stock prices help them to pay an attractive premium to their merger partner while still accrediting earnings. Many of the deals announced have involved small banks selling to large regional institutions.
Large banks can enter an appealing market through a strong community bank.
Union Planters Corp. Deals are also occurring among banks smaller than U.S. Bancorp and Union Planters. Compass Bancshares of Birmingham, AL has acquired three institutions in Texas, one of the nation's most dynamic markets. Banks are not able to make any more significant expense cuts and are finding revenue growth increasingly difficult. The growth factors needed to maintain earnings are not easy to achieve organically, and for the past three to five years, purchasing other institutions has been the most effective way to increase earnings. All Rights Reserved.