While high shareholder returns and profits have long allowed Maryland's small banks to remain independent, many such banks say they are now being forced to consider mergers and acquisitions with larger banks. Some Maryland banks that perhaps never considered merging with a competitor are now thinking about doing so in order to remain profitable.
Bank officials blame the trend on a lagging economy that has yet to recover from the 2007 recession, increasingly expensive government regulations, as well as a combination of record-low interest rates and insufficient demand for new loans.
Around 80 banks are headquartered in Maryland, and most of them have fewer than $500 million in assets. Some banking industry experts have even suggested that financial institutions need at least $1 billion to remain independent, meaning that many of Maryland's banks are finding it harder and harder to compete with their larger rivals.
One banking consultant predicted that Maryland could lose a third of its bank headquarters in the next 10 years, adding that mergers and acquisitions could rapidly begin to increase by late 2013 if banks in the state continue to suffer from poor profits.
Of course, banks aren't the only businesses that are considering selling or merging assets to remain afloat. Business transactions of this kind require specific knowledge of corporate and business law, and going into an acquisition or merger without the proper legal preparation could be disastrous. Maryland business owners would do well to consult with a business law attorney to ensure that the sale or acquisition of business assets goes smoothly and profitably.
Source: The Baltimore Sun, "Maryland's smaller banks may be headed for a wave of mergers," Eileen Ambrose, Dec. 7, 2012