More Banks Interested in Expanding, Few Want to Sell

It seems more banks are eyeing the possibility of expansion in 2013, according to a survey sponsored by ""Crowe Horwath LLP"":http://www.crowehorwath.com/.

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The ""2013 Bank Director & Crowe Horwath LLP M&A survey"":http://www.bankdirector.com/files/2813/5404/9904/MA_Summary_Results_2012-Final-2.pdf was completed by 224 CEOs, senior officers, and directors of banks across the country. An analysis of the survey will publish in the Q1 2013 issue of ""_Bank Director_"":http://www.bankdirector.com/ magazine scheduled for release in January.

According to the results, 57 percent of banks intend to make some form of acquisition in the next year, up from 52 percent in last year's survey. Of those planning to acquire another institution, 45.5 percent are interested in buying a healthy bank, 20.6 percent are looking at branches, and 17.2 percent intend to buy a FDIC-assisted institution. About 9.9 percent said they intend to acquire a loan portfolio.

Furthermore, many bankers expressed interest in acquisitions outside of their core banking franchises. Out of the banks that are looking at expanding, 28.8 percent said they intend to acquire a residential mortgage origination business in 2013. That comes as little surprise, _Bank Director_ says in a release.

""Mortgage companies that weathered the financial crisis are in a relatively strong position, particularly those that specialize in refinance,"" the release says.

That may be easier said than done, however. While more bankers are interested in making acquisitions, 88.9 percent have no intention of selling any aspect of their business. Of those willing to sell, most intend to part with branches or loan portfolios--only 2 percent intend to put their actual bank on the block.

There are other barriers to expansion standing in the way, as well. The majority (61.7 percent) of respondents consider unrealistic price expectations one of the top three hurdles stopping their acquisitions. Asset quality is another major concern, with 58.6 percent of bankers saying they're worried about the asset quality of their potential targets. The third-most cited barrier was limitations set by capital demands (34.4 percent).

Pricing was also a major worrying point for sellers--of course, their concerns went in the other direction. Most potential sellers (71.1 percent) said the current pricing is just too low. Economic and regulatory uncertainty were the second- and third-most common responses.

""I think people aren't as interested in selling as the pundits would say,"" said Rick Childs, director at Crowe Horwath. ""Yes, regulation is depressing, and banking is not as fun [as it used to be]. But I think these people are still committed to independence, not wanting to have your hometown bank owned by somebody else. There's still a lot of pride in that.""

Out of those who may be willing to sell, 20.8 percent said they would do so if the experience of leading the bank were no longer provided the same satisfaction. Regulation was another driver for potential sellers, with 19.8 percent saying the high cost of regulation would bring them to the market.