Deposit run-off can be a signifi cant issue and should be care-fully considered with the current banking environment. Average run-off during 2016 was 17.7 percent, a marked increase from the average run-off from 2011 to 2015 of 10.9 percent. Any purchase-and-assumption agreement should include buyer protections for certain levels of run-off and will likely include pre-and post-transaction nonsolicitation provisions targeted at reducing run-off levels. Th e building and location also are important in the value proposition of a branch transaction. Buyers should conduct a careful analysis of the branch location, including a competitive analysis, traffi c-fl ow study, infi ll cost bids, ongoing occupancy expense and an assessment of the location’s capacity to support future growth. As with a greenfi eld location, buyers should con-sider market demographics, census trends and trade areas in the decision-making process. Branch transactions may be off ered with loans included or excluded. During 2016, 32 of the 56 (57.1 percent) branch transactions reported including at least some loans. As with a whole bank transaction, loans acquired in a branch transac-tion can include issues and should be carefully reviewed. Th e P&A agreement may include a number of provisions related to loans, including put provisions, post-closing loan performance or post-closing buyer due diligence requirements, if loan due diligence wasn’t conducted before closing the transaction. While transaction complexity can greatly vary, most branch acquisitions off er a relatively straightforward purchase, regula-tory approval and integration process. In addition to the natural appeal of a relatively simple acquisition, a branch transaction can help build internal capabilities and know-how for banks that have limited acquisition experience. Building these capa-bilities is especially important for banks looking at M&A as part of a growth strategy in the future. Large banks pursuing a branch divestiture strategy are in-clined to pursue the transactions that remove the most branches from their balance sheet in the fewest number of transactions possible. Th us, a bank only interested in one or two branches may fi nd itself at a disadvantage to a buyer willing to acquire a much larger group of branches in a single transaction, even if that bank is willing to pay an above-market premium for the branches in which it’s interested. Th is challenge in beating out larger buyers in an auction pro-cess highlights the need for banks to have a strategic, proactive branch acquisition plan. Th e owners of the branches a bank is targeting should be made aware the bank is interested and willing to pay a reasonable price for the branch in question. Th is proactive approach is a long-term play and may not bring results overnight, but it’s likely to highlight some opportunities that a more passive approach would miss. If a bank is looking to go after one or more branches us-ing a one-off , unsolicited approach, it will likely have to pay a premium to the market. However, it’s also likely that the bank would have to off er an above-market premium to get noticed in an auction process for multiple branches. With the mar-ket value of branch deposits somewhere in the 3 to 5 percent range for desirable markets, buyers in unsolicited transactions are possibly looking at a deposit premium north of 5 percent. Nevertheless, the opportunity to strategically build out a bank’s footprint and acquire access to valuable, core deposits could be worth the additional premium on deposits necessary to bring a prospective seller to negotiation. While branch banking continues to change, branches are still relevant, and branch acquisition opportunities will continue to be available. Th e most successful players in this environment will be well-informed, strategically proactive and ready to pur-sue the right opportunities at a moment’s notice. Wyatt Jenkins is a certified public accountant and vice presi-dent, BKD Corporate Finance, LLC. He can be reached at email@example.com. BEATING MARKETPLACE LENDERS AT THEIR OWN GAME BY NASEER NASIM A variety of factors have led to a tightening of consumer and small business lending by banks. Conversely, private eq-uity and venture capitalist fi rms have invested billions of dollars in marketplace lenders, which the media portray as contributing to the “Uber-ization” of banking. Banks once owned the lending game but are now being chal-lenged by these non-traditional lenders. Marketplace lenders NEXT MONTH: Partnering With Fintechs EMV Update are approaching the market by off ering speed, simplicity and convenience at a premium price. Th is resembles the “conve-nience store” business model where consumers pay a premium for items they would typically buy at another store at a fraction of the cost. Borrowers are essentially paying for convenience. It is also often easier for the unbanked and underbanked to ac-cess fi nancing through a marketplace lender. Th e small amount of documentation needed for a loan application is one of the primary draws of marketplace lenders. In fact, 81 percent of retail consum-ers and small-and medium-sized enterprises that have borrowed through a marketplace lender did so because of the ease and speed of application process, according to Deloitte. Th e convenience of using an online platform to apply was a key driver as well. Deloitte also revealed that a majority of borrowers, 72 percent, were also drawn to marketplace lenders due to the certainty of outcome for a loan application enabled by a fast credit decision process.