Bank Consolidation Impact Wide

When a Louisiana community bank acquires another Louisiana community bank, one bank attains markets, deposits, loans, people and scale. The other bank, for many reasons, found a partner to achieve their goals. Let’s assume, for our purposes, these two are pleased with the outcome. For onlookers, they may see community banking taking another hit. Fewer bankers, less political muscle in contacts and PAC contributions. A smaller pool of bankers to serve as volunteers in local and state organizations like the LBA. The consolidation is seen as one consequence of extraordinary regulatory requirements that make no economic sense. In March of 2008, there were 162 banks domiciled in Louisiana. In June 2017, we have 128 domiciled here. Seventy-two of those 128 that have assets below $250 million. There are 118 of the 128 below $1 billion. More consolidation is in the future of Louisiana and the nation.

A couple of developments related to this. This month the LSU Graduate School of Banking held a strategic planning session that had a focus on the industry consolidation and its impact on the school. The sweet spot for GSB are banks $500 million and below. That is the challenge. The top three locations students come from to attend GSB are Louisiana, Tennessee and Mexico. About 10% of the student body comes from Mexico. There are six such schools nationwide and LSU GSB will work to continue its excellence in education and leadership.

Another development is with state banker associations around the country. We are meeting by conference calls and planning for an in-person meeting in November to confront how consolidation is impacting the ability of state banking association to deliver on their mission. We have divided ourselves into specific group topics to prepare, and I serve on the Political Engagement Steering Committee. I hope to come away from this exercise with a few items that can help us here at LBA. What we are confronting here is similar to the challenges you face at your bank, except what you face is much more difficult. I am grateful that LBA has a great staff and a supportive board of directors that will keep us on mission.