Possible Bank Merger - BOD's Fiduciary Duty

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Question:

If a reputable and good standing community bank (Bank A, which is publicly traded) approaches another good standing community bank (Bank B, which is publicly traded) for merger talks, is it not the fiduciary responsibility of Bank B's Board of Directors to entertain the idea of the merger? What are the rules and regulations that state bank board of directors have a fiduciary responsibility to not only the bank, but the stock holders as well?

Answer:

There are, indeed, fiduciary responsibilities in such a situation. They may be affected by a combination of federal and state laws, as well as the bylaws of the bank itself. The boards of directors of both banks should be carefully advised by competent counsel when any suggestion of merger or acquisition is in the air. This is most definitely not a time for doing things "on the cheap."

First published on BankersOnline.com 11/13/06