Report Evaluates Effects of Mergers on Small, Rural Banks

Article excerpt

With media attention focused on megabank mergers over the last year, consolidation among small, rural banks is being overlooked, according to a report in Financial Industry Perspectives, the journal of the Federal Reserve Bank of Kansas City.

In the article "An overview and analysis of community bank mergers," authors Joe Van Walleghem and Paul Willis looked at 19 banks in the region to see the effects of mergers on their cost savings and profits.

"The factors that are promoting consolidation in the banking industry are also relevant for the smallest banks -- namely the need to spread the cost of technological and administrative overhead and the desire to maintain earnings growth," the authors wrote. "With limited growth opportunities in many rural communities, smaller banks often choose to merge with other nearby banks as the means to gain asset size and improve efficiency." The study found that the mergers were usually financial successes for the banks. A separate article examined the ownership structure, manager wealth and risk in commercial banks. People Midland Trust, an affiliate of Oklahoma City-based MidFirst Bank, has appointed Hal Pennington senior vice president. He will be responsible for managing the new Duncan office and serving as trust administrator for area customers. Pennington has more than 23 years of experience in the trust industry, working for Security National Bank & Trust and its successors. …