Today Bank Director, the leading information resource for directors and officers of financial institutions nationwide, released the results of its 2024 Bank M&A Survey, sponsored by Crowe LLP, an accounting, consulting and technology firm. According to the survey, bank leaders’ enthusiasm for M&A appears dampened going into 2024 — in line with reduced deal activity in 2022-23. But an appetite for sticky, low cost deposits could motivate some financial institutions to make a deal in the year ahead.
Eight-five percent of respondents point to an attractive deposit base as a top attribute in an acquisition target in today’s environment, compared with 58% who said as much a year ago. That was followed by a complementary culture (58%), efficiency gains (55%) and locations in growing markets (48%).
“While total deposits for the industry remain well above pre-pandemic levels, deposit competition and pricing have remained key themes in 2023, particularly following the bank failures in spring,” says Emily McCormick, vice president of editorial and research for Bank Director. “Looking at 2024, a strong core deposit base seems likely to influence prospective deals.”
Respondents do not expect dramatic swings in their bank’s deposit rates over the next 18 months. Forty-five percent expect deposit rates to increase by no more than 50 basis points, and 22% expect them to decline by that amount.
“The overall trend is banks trying to keep deposits low and not reacting as much as the loans have reacted. It comes down to overall pressure on the margin,” says Patrick Vernon, advisory services senior manager at Crowe. “We haven’t seen the same magnitude of repricing on the deposit side yet in the last 12 months. It’s kind of wait and see, and it seems like we’re going to keep waiting right now.”
Key Findings
Transformational Deals
Forty-one percent of respondents say their bank would be open to a merger of equals, while 34% say it would not be. Nearly a quarter are unsure. Two…
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