A Busy Few Weeks in Banking (Editorial)

Some of us have watched the banking industry long enough to recognize the cycles, so we were expecting to see bank deals start to happen. We weren’t necessarily expecting three deals involving five of the state’s 20 largest banks in less than two weeks — but when business news is one’s business, that’s an embarrassment of riches.

And Arkansas isn’t alone. Bank mergers and acquisitions are popping up from coast to coast, and few (only 16 in the first half of the year) are the FDIC-assisted bank failure kind of acquisitions that we became accustomed to during the past four years.

In the old days, rapid bank consolidation was followed, as night follows day, by a new crop of brand-new banks. Remember that old business plan: Raise a few million bucks, start up a bank, baby it along for five years and then sell it for a tidy profit? Some folks did it more than once. Very exciting stuff.

Then things changed. Some folks got stuck with bank stocks that languished. Banks that couldn’t find a buyer. While Arkansas didn’t suffer from this, a bunch of the banks that the FDIC shut down were young banks organized at the wrong time.

No new banks have been chartered from scratch in Arkansas in eight years. Nationally, only a handful have started up in the past three years. Starting a bank just doesn’t seem to have the appeal that it used to have, what with razor-thin margins, loan demand that is still soft by the old standards and more regulations than ever.

We are seeing a few more bank branches, a few banks easing into some new markets. Integrity First of Mountain Home is tackling northwest Arkansas. If Bank of the Ozarks can make it in New York, New York, it can make it anywhere.

But mainly we expect to see a lot more bank deals.