After a robust 2021, U.S. bank branch acquisitions have slowed considerably in 2022 as regulatory challenges and the Federal Reserve's aggressive tightening policy continue to dampen the M&A environment.
Only 15 branch acquisition deals have been announced in 2022 as of Sept. 28, involving 31 branches and $1.63 billion in total deposits, according to an analysis by S&P Global Market Intelligence. That compares with 44 acquisitions in all of 2021.
Mix trends banks look for balance
Digitization and online banking, which picked up pace during the COVID-19 pandemic, have forced banks to cut down on their branch networks. At the same time, banks are looking to strike a balance when it comes to increasing digital adoption while maintaining a physical footprint.
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Most recent branch M&A deals
In the most recent purchase, Keyes, Okla.-based First Keyes Bancshares Inc. subsidiary High Plains Bank is acquiring certain assets and deposits associated with Wichita, Kan.-based Equity Bancshares Inc. unit Equity Bank's branch in Cordell, Okla. Deposits to be transferred as part of the deal are expected to be $21.3 million.
The largest deal this year so far is Bank of Idaho's acquisition of Seattle-based HomeStreet Bank's Eastern Washington branch network in Spokane, Kennewick, Dayton, Yakima and Sunnyside, including the branches' lending business and employees. The transaction was completed July 29, and a total of $258.4 million in deposits was transferred. Bank of Idaho is a unit of Idaho Falls, Idaho-based Bank of Idaho Holding Co.
Bank of Idaho announced in its second-quarter earnings release that its branch acquisition "will result in a significant increase in deposits in the third quarter" even though the bank has seen deposit growth slowing after the extraordinary increases experienced during 2021.
Walla Walla, Wash.-based Banner Corp. unit Banner Bank sold its four branches to Liberty Lake, Wash.-based Spokane Teachers CU. The deal is the second largest in terms of the number of branches acquired and deposits transferred. The sale was completed June 27 and $212 million in deposits were transferred.
Stillwater, Minn.-based Ameri Financial Group Inc. subsidiary First Resource Bank purchased the charter of Waseca Bancshares Inc. unit Lake Area Bank in Lindstrom and Forest Lake, Minn.
Lake Area bank had earlier entered into an agreement to sell the bank to Eau Claire, Wis.-based Royal CU, which was approved by the shareholders of the bank. However, the sale was denied regulatory approval by the Minnesota Department of Commerce. Lake Area Bank and Royal CU had to restructure the transaction, under which the credit union will acquire the bank's branch offices in White Bear Lake, Stillwater and Hugo, Minn.
Largest branch deals
The largest branch acquisition deal since 2015 was struck between Providence, R.I.-based Citizens Financial Group Inc. unit Citizens Bank NA and HSBC USA Inc. subsidiary HSBC Bank USA NA.
In the deal, announced in May 2021, Citizens Bank agreed to acquire 80 East Coast branches and the national online deposit business of HSBC Bank. The acquisition involved $9 billion in transferred deposits.
