- Associated Press - Sunday, January 8, 2017

MADISON, Wis. (AP) - A trend of bank consolidations in Wisconsin is expected to continue in 2017, especially among smaller community banks.

Nineteen mergers or acquisitions involving Wisconsin-based banks were announced in 2016, up from 12 mergers announced in 2015 and nine in 2014.

Challenges of rising technology and regulatory costs are motivating longtime shareholders who want to cash out but are having trouble finding management successors, especially in rural communities where banks have been selling to other institutions.

“I don’t see any reason those trends are going to change,” said John T. Reichert, a shareholder in the banking and finance practice of the law firm Reinhart Boerner Van Dueren. “You can talk all day about whether consolidation is good or bad or indifferent, but it’s going to continue for a while.”

Industry professionals said some mergers are driven by older shareholders of community banks who want a way to be able to sell their stock.

“Whether it’s for estate planning or whatever reason, shareholders are saying, ‘I need the ability to sell my shares,’” Reichert said. “A lot of smaller community banks don’t have an active market for their shares. That has driven some sales.”

Mergers and acquisitions in banking don’t mean the industry is weak, experts tell the Journal Sentinel (https://bit.ly/2iELjDE).

The latest FDIC survey showed that in Wisconsin, 97 percent of banks were profitable through the first three quarters of the year. Also, 64 percent posted higher earnings than the same period in 2015, even amid a low interest rate environment that makes it harder to grow profits.

“I don’t think there is doom and gloom for community banking in Wisconsin,” Reichert said. “We still have more than 200 banks, and I think a lot of these bankers are sensitive to the fact that we’re going to have locally owned alternatives to some of the national banks. There will be consolidation, but community banking, at the same time, is thriving.”

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Information from: Milwaukee Journal Sentinel, https://www.jsonline.com


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