Academic journal article Federal Reserve Bulletin

Bank Merger Activity in the United States, 1994-2003

Academic journal article Federal Reserve Bulletin

Bank Merger Activity in the United States, 1994-2003

Article excerpt

Mergers and acquisitions have significantly changed the U.S. banking industry over the past quarter century. This study examines patterns in the 3,517 mergers consummated among commercial banks and thrift institutions (savings banks, savings and loan associations, and industrial banks) during the ten years from 1994 to 2003. The data used in this study include the vast majority of consolidation activity that took place during the period and are more detailed and comprehensive than any data available for the years preceding 1994.

About $3.1 trillion in assets, $2.1 trillion in deposits, and 47,300 offices were acquired during the ten-year period. The annual number of mergers was fairly steady between 1994 and 1998 and then declined to a much lower level by 2003. Roughly three-fourths of all deals involved two commercial banking organizations. The remaining mergers involved a thrift institution as the acquirer, the target, or both. The target in the median merger during the period had $102 million in assets, $86 million in deposits, and 3 offices. Mean (average) values are substantially higher because of a relatively small number of extremely large deals: $874 million in assets, $601 million in deposits, and 13 offices.

Whether calculated as a mean or median, roughly 5 percent of the industry's assets, deposits, and offices were acquired in mergers in the typical year in the period. …

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