Magazine article American Banker

Garrott Sees Acquisitions as Bad Bargain for Banks

Magazine article American Banker

Garrott Sees Acquisitions as Bad Bargain for Banks

Article excerpt

Merger mania in the banking industry?

Thomas M. Garrott just shrugs off the phenomenon. "All the press, all the hype, I would say is manic and makes absolutely no sense to me," says the chairman, president, and CEO of National Commerce Bancorp. Mr. Garrott practices what he preaches. The Memphis-based bank has not made a single bank acquisition in the 12 years he has been with the company.

"I think some bankers have panicked," Mr. Garrott says, delivering one of his typically unvarnished opinions. "They've lost the ability to control the outcome of their own businesses. They've lost options, so the consolidation is a function of necessity."

Mr. Garrott's view of bank consolidation arises from his pessimistic assessment that the overregulated industry is in danger of going the way of the dinosaur. Since he has little faith that Congress will ever grant banks the wider powers they need to survive, he doesn't believe it makes a lot of sense to purchase banking assets - except in an in-market transaction where substantial cost savings can be extracted.

National Commerce has purchased a few scattered S&L and bank branches over the years, but Mr. Garrott adamantly refuses to plunk down a premium for somebody else's bank. Citing the old adage that the seller always knows more than the buyer, he adds, "Until we get on top of all our business segments, I cannot imagine the challenge of buying somebody else's business."

When National Commerce does make investments, it's either in more supermarket branches or in nonbank businesses. …

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