Which Is the Next Home Loan Bank to Seek a Merger?
by Rob Blackwell
As the Seattle and Des Moines Home Loan banks inch closer to the first successful voluntary merger in the system’s history, observers are beginning to ask the question: who’s next? The consolidation of the 12 Federal Home Loan banks has been a perennial discussion point for at least the past two decades; an American Banker story from 1998 hinted that it was just around the corner. But it’s clear that if the Seattle and Des Moines merger goes through — which most observers expect to happen next year barring a last-minute surprise — it could pave the way for more combinations. The difficult part, however, is figuring out which of the remaining 10 banks are most likely to seek a merger. A look at basic financial information, including profitability, isn’t that helpful, observers said. “External analytics don’t tell you anything because it’s not a financially driven transaction,” said Karen Shaw Petrou, managing partner of Federal Financial Analytics. “The ultimate decision is based as much on what the members want of the bank regardless of profitability and the goal of the CEO. Those are nonpublic drivers that can only be inferred retroactively.”