The structure of the commercial banking industry has changed substantially in recent years, as branch banking, mergers, and holding companies have become major avenues of bank expansion.' Bank mergers, in particular, produced significant changes in both national and local banking markets with the absorption of nearly 900 commercial banks in the nation between 1960 and 1965. Bank mergers were especially important in the Fourth Federal Reserve District, where 121 banks were absorbed during the 1960-65 period and, as a consequence, the number of banks in the district declined by more than 10 percent. However, despite the importance of the merger movement, there is little information on the impact of merger upon the performance of merging banks.2 This study examines the impact of merger upon the performance of merging banks in the Fourth Federal Reserve District during the 1960-65 period. The analysis is based on a comparison of the performance of merging banks with that of a sample of nonmerging banks. Briefly, the evidence indicates that the two groups of banks differed only slightly in terms of changes in their asset structures and loan portfolios in the period following merger. In contrast, the revenue of merging banks (measured by average yield on assets) rose significantly more than that of nonmerging banks during the postmerger period. However, merging banks incurred significantly higher increases in current operating expenses that more than offset the higher revenues, and, consequently, there was little difference between the profitability rates of the two groups of banks.