A lower corporate tax rate and a generally more bank-friendly regulatory environment should translate into a year of mergers and acquisitions in the Baton Rouge market.
Consolidation will continue happening to banks with less than $1 billion in total assets. These smaller banks are typically fighting flattening interest rate curves, slower loan and deposit growth, significant increases in cybersecurity expenses and rising deposit costs, making them more willing to explore getting bought out by bigger banks with more resources. As of September 2018, 86% of banks across the country fit that description.
So who is looking to buy? Keep an eye on Baton Rouge-based Investar (pictured), which has in the past two years announced three bank acquisitions that were all under $1 billion in total assets. Expect more acquisitions from this community bank franchise in the coming year.
Don’t be surprised if more community banks emerge as new contenders in the mergers and acquisitions scene. While larger banks focus their efforts on metropolitan and suburban markets, well-performing community banks will be on the rise in rural markets, moving into suburban markets by acquiring similar, but less successful, banks.
There’s also plenty of opportunity for growth for larger banks, especially now, thanks to several recent deregulations. Chief among them: A change in the Dodd-Frank regulatory framework that raises the threshold for extra scrutiny on banks from $50 billion to $250 billion in assets. This means that more banks between the $50 billion and $250 billion threshold should also start inking more deals in the near future.