Are increasing regulatory burdens placing greater pressures on community banks toward industry consolidation?
I have had the same checking account for more than 25 years; however the financial institution’s name printed on my checks has changed four times. Obviously, consolidation is not a new concept to those in the banking industry, so why is there speculation that there will be an unprecedented wave of mergers in the community banking sector?
In recent years, all banks have faced a sustained period of historically low interest rates, which has tightened the spread between the interest income earned on loans and interest expense paid on deposits, making it difficult to generate profits from the core operations of the bank. In mid-September, the Federal Reserve announced its intention to extend its low interest-rate policy through mid-2015, which extends the timeline banks will have to deal with the impact of squeezed margins on their profitability.
Click here to read the full article which appeared in the Fall Edition of Carolina Banker.