Bank M&A Slows After Surge Last Year

Entering 2026, many in the banking industry were anticipating a continued wave of consolidation. And yet that hasn’t materialized.

As of May 8, there have been 17 deals announced with a disclosed sales price, according to data from the investment banking firm Piper Sandler Companies. That puts the industry on pace for 57 transactions with a sales price announced this year. If that holds true, that would be less than 77 deals announced in 2025 and be roughly in line with 2024.

“It’s not that M&A is dead,” says Greyson Tuck, president of the consulting firm Gerrish Smith Tuck. “There are still deals happening but not to the level that people expected. If you had asked people at the beginning of the year if there were going to be more or fewer deals in 2026, eight out of 10 would have said more.”

Part of it could have been “unrealistic expectations” entering the year, says Jonathan Hightower, a partner at the law firm Fenimore Kay Harrison. The third and fourth quarter of 2025 saw a surge of announced deal activity, including larger regional banks jumping into the fray, such as The PNC Financial Services in Pittsburgh, Huntington Bancshares in Columbus, Ohio, as well as the merger of Pinnacle Financial Partners in Nashville, Tennessee and Synovus Financial Corp. in Columbus, Georgia, which closed this year and created a $123 billion bank. However, keeping that pace of deals was unlikely, and the industry has entered a more normalized rate of deals.

“It is just more consistent with what we have been seeing prior to the second half of last year,” Hightower says. “I don’t see that as a slowdown. It’s more of a sustained pace rather than the frantic pace we had.”

Bill Burgess, co-head of financial services investment banking at Piper Sandler, notes that there have been only two deals announced this year with a value over $1 billion — Spanish banking giant Banco Santander’s agreement to buy the $86 billion Webster Financial Corp. in Stamford, Connecticut, for roughly $12.2 billion. The Houston-based $44 billion Prosperity Bancshares’ announced a deal to acquire the $11 billion Stellar Bancorp, also in Houston, for about $2 billion. He believes there has been slower activity this year for larger banks because of a dearth of sellers. In recent years, the banking industry has weathered a pandemic, a regional bank crisis in March 2023, more regulatory scrutiny, as well as sustained high interest rates and inflation.

But over the last year, banks are seeing regulatory relief and a better operating environment. All of that means executives are likely expecting better compensation tied to performance this year. And this more positive outlook may have given some banks that would have considered an exit pause. “It hasn’t been a great job to be the CEO of a bank recently,” Burgess says. “But they are enjoying life right now.”

Some potential buyers may have turned to stock buybacks rather than deploying their excess capital through an acquisition, says Chris Marinac, director of research at investment bank Brean Capital. He noted that more than 100 small and midcap banks had a lower share count in the first quarter compared with the fourth quarter in 2025. That indicates the institutions repurchased their own shares. However, he notes that it’s likely that management teams are also looking at organic growth and acquisition activities, despite the share buybacks.

Bank stocks have also ticked up after falling earlier this year when the war in Iran kicked off. Better bank stock pricing could lead to more deal activity. Assuming the situation in the Middle East doesn’t deteriorate drastically, the better stock pricing should help get deals done. “It is a moment to be thoughtful,” Marinac adds. “Let’s see how some of these things play out.”

Deal pricing perhaps hasn’t moved enough to entice banks that can remain independent and are in no rush to sell, Tuck says. For the deals with a disclosed price, the median price to tangible book value of the seller has been about 141%, according to Piper Sandler. In Bank Director’s 2026 Bank M&A Survey, 68% of respondents said they would need a price of at least 175% of book value to consider selling. “Pricing hasn’t really moved in a way that motivates sellers,” Tuck says. “Is it the singular factor? No, but do I think it is part of the equation? Yes.”

Still, conversations are taking place. Hightower says buyers remain interested in sellers in good markets with strong customer bases. Geographic expansion and adding a low-cost deposit base were the top two factors that made M&A an important piece of a bank’s growth strategy, according to Bank Director’s survey. “It seems fairly traditional in terms of what people are looking for,” Hightower says.

Some sellers could potentially become motivated by a fear that the regulatory pendulum will swing back once President Donald Trump’s four-year term is up in 2028. Under the Biden administration, deals took longer to gain regulatory approval and to be completed. Because of that, institutions that anticipate succession issues, even a few years from now, may move their timelines forward to take advantage of the better regulatory environment, Hightower says. Sixteen percent of respondents to Bank Director’s 2026 Bank M&A Survey said the faster regulatory approval time could influence pursuing a potential sale this year and beyond.

This could especially be true for larger bank M&A. These institutions, in particular, might have more trouble gaining regulatory approval if the Democrats retake the White House in the 2027 election. That could spur a few more regional bank deals. “We have every reason to be upbeat for large bank consolidation in 2027,” Burgess says. “The election is a big deal.”