Nearly two thirds of US community banking executives think their banks will be involved in a merger or acquisition within a year, according to KPMG.
In a KPMG survey conducted in October, 40% of the responding executives thought their institution would be involved in a merger or acquisition as buyer and 25% thought it would be involved as the seller.
John Depman, national leader of Regional and Community Banking for KPMG, said: "Many have been predicting a flood of M&A activity in this industry over the past several years, but it’s been more like a steady drip.
"The fact is that it’s tough to get a deal done. The bid-ask price spread, the regulatory environment, and targets’ balance sheet issues are all real challenges to overcome."
The survey also found that community bankers were positive about their bank’s prospects, with 85% of respondents saying revenue will increase a year from now.
In terms of challenges facing community and regional banks, 42% said regulatory and legislative pressures were the biggest obstacle to growth, down from 47% last year.
Depman said: "Community banks are exhibiting a great deal of resiliency in light of the challenging regulatory and economic environment they’ve faced the past several years.
"Regulatory compliance requirements are negatively impacting their operating costs, but this is accepted as the new normal, and community banks are taking steps to ensure their viability and growth or evaluating whether it’s the right time to sell."
38% of survey respondents worked for institutions with $1bn to $5bn in assets, 27% with $5bn to $10bn in assets, and 35% with $10bn to $20bn in assets.