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Bank consolidations appear to be more common

As demonstrated by the acquisition of the First State Bank of Central Texas, there appears to be a trend in the field of community banking. First State Bank was just recently purchased for $211 million and the deal is set to close in June.

First State Bank has deposits valued at close to $289 million. First Bank has 31 branches already located in our state. It also has 11 branches and 62 employees in one Texas community alone.

 

Banks institutions appear to have been facing more difficulties in generating profits due to the recent recession and tighter banking regulations. Because of this smaller banks have sometimes chosen to be sold to bigger firms.

One investment banking managing director in Texas felt that because of questions of efficiency we could be seeing more deals of this kind occurring. "More boards are likely to partner up with someone else who is bigger," he was quoted as saying. A purchase of this kind can signal to other banks that a prospective buyer may also be available.

There are a number of complex considerations that need to be made whenever an acquisition or business formation takes place. Though banks and other businesses may have a good idea as to how to increase profits and make a go of it, careful business planning must also take place.

An experienced business attorney can prove helpful under these circumstances. The attorney can advise as to what sort of entity should be chosen, what sort of agreements need to be formed, tax considerations, etc. Considering how much money is at stake involving such transactions, decisions need to be made with care.

Source: Austin Business Journal, "First State Bank acquisition part of consolidation trend, expert says," Christopher Calnan, Jan. 23, 2014

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