Options Are Now ‘Wide Open’ for Banks

For banks thinking about their next big strategic move, there may be no better time to start taking action than in the year ahead.

Industry growth and profitability have rebounded from the pandemic years, and banks are flush with capital. The regulatory environment is also more favorable to M&A than it has been in years — 181 deals were announced in 2025, a roughly 45% increase from the prior year, according to S&P Global Market Intelligence. Industry experts who took the stage on the first day of Bank Director’s Acquire or Be Acquired Conference in Phoenix made the case that this is the year to start thinking about your next significant strategic move.

“A key challenge for much of the industry will be keeping efficiency ratios down and fending off the competitive threat of “nonbank barbarians eroding both sides of the balance sheet,” said Brian Leibfried, head of bank insights with Performance Trust Capital Partners.

“Everything’s open for us right now. The regulatory environment is open, capital markets are open,” he added. “Really the world is our oyster, but we have to be intentional, or we won’t get there on efficiency.”

Counseling bank clients over the past year has felt different, added Mark Kanaly, a partner with Alston & Bird. Banks are not only looking at M&A, but also are considering making changes to their charters. That allows them to switch to a primary regulator they’re more aligned with. If a bank has had something on its wish list for a few years, it’s “now or never” to take some steps toward that, he said. “What I mean by that is not to go do something reckless or foolish, but that [the environment] is wide open at the moment in terms of optionality.”

Growth in net interest income growth has buoyed broader industry profitability, said Tom Michaud, CEO of Keefe, Bruyette & Woods. Broad swaths of the industry have seen earnings per share improve, and banks have squirreled away more greater stores of capital, in anticipation of worst-case scenarios that never came to fruition.

“It is good for the industry, good for your institution, good for investors when capital has been building like it has because of the things that you might do with it,” Michaud said. “Organic growth always sounds like the first best choice, acquisitions, and then also possibly capital return” in the form of dividends and share repurchases.

Additionally, the capital markets are “wide open” this year, so expect to see more banks tap the capital markets for initial public offerings or debt refinancing, he said.

None of this means that banks should seek out deals simply for the sake of it, however. Sunday morning’s speakers emphasized that consistency and durability in the net interest margin and earnings will be critical to longer-term independence. Key to that is the industry’s ability to hold onto core deposits. “What core deposits do, by creating a funding advantage, is they enable resilient returns and durability because they’re creating riskless returns,” Leibfried said.

Banks are also facing greater competition from nonbanks, and new technologies are posing existential questions for the industry in the longer term. Crypto firms are empowered by the GENIUS Act, and fintechs are increasingly seeking bank charters, honing in on consumer and small business lending, as well as payments.

Federal banking regulators issued guidance in July 2025 for banks looking to provide crypto or digital asset custody services, but there’s been so far limited interest in doing so. Just 21% of executives and directors who took part in Bank Director’s 2026 Bank M&A Survey said they were looking into providing those services and 44% had not even discussed it.

But bankers should think about the potential long-term implications that stablecoin and crypto may have for their industry, said Mandi Simpson, a partner with Crowe. She cited Amara’s Law, a theory that people tend to overestimate a technology’s impact in the short term and underestimate it in the long term. Bank deposits will not be siphoned out of the system and into stablecoins overnight, but at a minimum, stablecoins may become a new payments rail.

“We’ve been talking about blockchain and banking for at least 10 years, but it’s been pretty easy to discount because we’ve had multiple crypto winters, some literal failures tied to digital assets, and it really just hasn’t impacted the core fundamentals of banking,” she said. “I think [the GENIUS Act] has the opportunity to be the catalyst that really moves stablecoins from hype and experimentation to adoption.”

*This story has been updated to correct a quote from Mandi Simpson, a partner at Crowe, about past crypto crashes.