D.A. Davidson Survey Finds Expectation for Increased M&A Activity for the Community Banking Industry in 2015

D.A. Davidson & Co., an employee-owned, full-service national investment firm based in the Northwest, hosted its 17th Annual Financial Institutions Conference in Denver on May 11 - 13.

D.A. Davidson conducted a survey among conference participants to evaluate key developments expected for the industry in 2015:

• Merger & acquisition activities is anticipated to increase for the second half of the year. Most investors believe in-market transactions are more compelling than market expansion while bank executives are optimistic about both types of deals.
• Commercial underwriting has experienced rate pressure and some deterioration in terms and structure according to survey results.
• 76% of bank executives believe their institutions will experience growth above 6% for the year and 30% anticipate loan growth to exceed 10%.
• The highest perceived risk lending category over the next 24 months will be the construction and land portfolios – similar survey results as last year. Given overall strength in asset quality, we would anticipate any deterioration to be modest.
• Most survey participants believe the Federal Reserve will increase rates in the second half of 2015 and the Fed Funds rate will be in the range of 50-100 basis points by the end of 2016.

“A majority of the community banks we cover are seeing steady improvements in organic loan growth rather than market share gains to drive overall balance sheet expansion,” said Jeff Rulis, banks and thrifts analyst at D.A. Davidson. “Banks and investors see increased M&A activity ahead. Bank executives at the conference highlighted that they are particularly focused on building alternative sources of revenue to compliment interest income and core deposit generation.”

“D.A. Davidson’s Financial Institutions Conference has a track record of bringing together attendees to discuss the primary issues and trends impacting the community bank industry,” said Rory McKinney, managing director in D.A. Davidson’s Financial Institutions Group and co-head of Investment Banking. “We had record attendance this year and we are encouraged to see banks discussing upcoming changes in the industry, including banking regulations, interest rate environment, growth opportunities and credit quality. We believe there will be a continued increase in mergers and acquisitions over the next few years as banks evaluate strategic alternatives and prepare for these industry changes.”

About D.A. Davidson & Co.

D.A. Davidson & Co. is a full-service investment firm with operations across the country. D.A. Davidson’s Equity Capital Markets Group provides a full suite of investment banking, institutional sales, trading, research and corporate services. D.A. Davidson’s investment banking team provides merger and acquisition advisory services, provides access to public and private capital, and provides strategic advisory services for its corporate clients. In addition, the firm’s industry-driven research teams offer award-winning research and are supported by a dedicated group of sales and trading professionals.

The Equity Capital Markets Group is based in Portland, Ore., and operates from offices in Baltimore; Boston; Chicago; Denver; Great Falls, Mont.; Minneapolis; New York; Orange County, Calif.; Salt Lake City; and Seattle.

D.A. Davidson & Co. is one of four firms within D.A. Davidson Companies, an 80 year-old, employee-owned financial services holding company.