Recent Community Bank M&A Trend: Divestiture of Insurance Agencies Kevin P. Tracy and Katie L. Kalkowski, Baird Holm LLP Sale and merger transactions involving community banks were infrequent in 2023. Transaction volumes were lower than prior years, both regionally and at the national level. However, the merger and acquisition market related to insurance agencies, both those affiliated with community banks and those not affiliated with community banks, saw increased activity in 2023. This article identifies some reasons for these divergent trends and discusses factors that owners and management of community banks should consider when exploring the possible sale of an affiliate insurance agency. Part One: Recent M&A Market Activity Lack of Community Bank Activity There was minimal community bank acquisition and sale activity in Nebraska in 2023.1 Transaction volume was similarly significantly reduced on a national level compared to 2022. Many reasons led to this lack of activity. Most prominently, increased economic uncertainty and the Federal Reserve’s response to inflationary conditions created a difficult transaction environment. As economic uncertainty increased, community bank buyers became more conservative in their valuation of target institutions. To the extent buyers were previously willing to ascribe value to earnings projections, they became less willing to do so. Instead, buyers increased their COUNSELOR’S CORNER 16 NEBRASKA BANKER
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