Bank Mergers & Applications

Bank Mergers & ApplicationsBanks must submit an application to one of the four federal banking regulators (Federal Reserve, Federal Deposit Insurance Corporation, Office of Thrift Supervision, Comptroller of the Currency) to merge with other banks. The amount of time that the Federal regulators spend reviewing the application and considering comments from community organizations varies according to the complexity of each application. This presents an excellent opportunity for community groups to protest the merger and inform federal regulators about whether or not the bank serves the lending, investment and service needs of the communities in which the bank is chartered. When the merger application process begins, the local bank examiner collects this information and determines if the bank is doing a good job of reinvesting in the community. When community organizations protest and identify problems with the bank, it is the bank’s responsibility to resolve these issues. Community organizations and groups have successfully negotiated Community Reinvestment Act (CRA) agreements as a result of such mergers. Banking regulators also evaluate whether a bank’s merger will negatively affect competition amongst banks in a given area and whether or not there will be a concentration of banks in any particular banking market. The regulators also analyze whether the bank has the financial and managerial capacity to serve communities’ financial service needs. These needs are referred to as the “convenience and needs factor”.After the regulators have conducted their review, they will decide to approve the application or hold hearings and then make a decision. The majority of applications are approved.