From banking consultant John Maxwell’s blog:
Now, of course, one of the dirtiest secrets in finance is that anyone can grow a bank. That’s the power of infinite demand. The bigger challenge is creating shareholder value. And that, my friends, tends to be inversely correlated to a bank’s growth. Remember that the next time a purported expert tells you that, “Scale is key.”
From a January 17, 2025 post by CNBC financial analyst Kelly Evans:
But a friend of mine who works in the investment banking business says his firm has the biggest backlog of merger deals heading into this year that they’ve ever had. . .
. . .one area that could get very busy is on the banking front. Having 4,500 or so different banks in this country may not be sustainable, especially when 77% of them have less than a billion dollars in assets, per Raymond James. These deals may be on the smaller side and not garner big headlines; we’ve already seen small acquisitions in Idaho and Texas this week that have generally flown under the radar.
Indeed the mid-sized banks–and mid-sized companies in general–could see the biggest wave of activity. The typical mid-sized bank saw its share price jump 10% in the weeks after the election, per Barclays. There used to be 80 bank deals a year under the first Trump administration, they note, versus just 30 a year under Biden.
What makes market work is differing opinions. Going forward I will review some of the largest mergers in the past three years to see if Maxwell’s point is born out. Or is member value increased?