Bank M&A Update: Modernizing bank merger competition, quality deposits, and Credit Unions

So, uh, the FDIC moves to modernize bank merger competition analysis, though gaps remain.

So the FDIC, uh, bank M&A overhaul would make it easier for banks to get deals done even though advisors say the framework still fails to fully capture the competitive landscape.

A proposed rule from the FDIC would recognize credit unions and thrifts as competitors in competitive analysis, a change the banking industry has sought for decades.

It would also establish clearer processing expectations, expand access to expedited treatment for banks with lower regulatory ratings, and reduce procedural hurdles for smaller transactions.

Those changes could enlarge the pool of potential buyers and sellers and make it easier for banks to complete multiple acquisitions in relatively quick succession, um, advisors told S&P Global.

However, advisors said the competitive analysis would remain too closely tied to physical branches and geographic markets to measure c- competition, leaving out the growing role of online banks, fintechs, and other non-bank providers.

Uh, the amount of competition outside the market, especially in rural markets, dwarfs the competition from within the market.

Peter Weinstock, partner at Hutton Andrews Kurth LLP, said in an interview, "If you're dealing with First National Bank of a rural market and First State Bank of a rural market, and they're going to get together and there'll be three hundred million of deposits in the market, they're just getting to a level where they can afford a little more technology, where they're competing with the big banks and all of those non-bank competitors." Um, in the rule itself, the FDIC acknowledged the industry's desire for fintech inclusion and said the propos- proposal may not optimally reflect the competitive landscape.

Uh, it asked the industry to provide comment on how it can incorporate fintechs.

Uh, "Fintechs aren't necessarily holding those deposits, but they are drawing them away from the banks, so they are a competitor," uh, said Douglas Wiesinger, uh, a member of the business services group advising financial institutions at law firm Butler Snow.

Uh, if the agency does not include them in the final rule, banks would still need to advocate for non-bank inclusion in their specific deals, advisors said.

So again, very interesting on some of the changes here.

Uh, we'll keep an eye on that and kinda see how that matriculates, you know, through the process here and see, see what comes of it.

But, uh, but I think a lot of good there.

Def- definitely a lot more good than, than bad, if you will.

Um, I don't really know that there is much bad there, but a lot of really good stuff in there, a lot of things in there that really have been, we've been waiting for to happen for a while.