The New Era of Shareholder Activism in U.S. Banks

The U.S. banking landscape is one of the most fragmented industries in the entire world. Bank consolidation historically has represented a vital tool for bank management teams (in addition to buybacks, dividend strategy and balance sheet efficiency) who are focused on optimizing shareholder returns. In the last 18 months, bank M&A has shown renewed signs of acceleration. This backdrop has emboldened bank activist investors to publicly intensify shareholder pressure on underperforming holdings within their portfolios. The subtle theme being communicated to banks is to either improve performance or sell during this building M&A wave.

According to Diligent Market Intelligence (DMI), over 70 U.S.-based companies faced activist pressure in 2025 to pursue strategic transactions, up from 56 in 2024. Roughly 20% of those campaigns in 2025 (up from 15% in 2024) involved banks. The most aggressive shareholder activists in the banking sector include Stilwell Value, PL Capital Advisors, Seidman & Associates and HoldCo Asset Management. HoldCo was publicly active in 2025, launching six campaigns in the final five months of the year, including against Comerica, which sold to Fifth Third Bancorp, and Eastern Bankshares.

Shareholder activists have unique agendas, although most banks that attract activist activity tend to have common problems. Poor stock price performance, weak earnings compared to peers, governance missteps and lack of attention to environmental and social matters can all trigger shareholder activism. Oftentimes, activists encourage banks to pursue strategic alternatives, which effectively is asking the bank to sell.

HoldCo (which had a 1.8% stake in Comerica) published a 52-page slide deck urging the bank to pursue a combination. Additionally, HoldCo publicly disclosed an 82-page white paper critiquing Eastern Bankshares. The criticism ranged from poor capital utilization (too much focus on buying other banks as opposed to buying back shares) and commentary regarding the bank’s poor governance.

The primary goal for activists is short-term stock price appreciation. These investors often sell down their positions once a target price is achieved. Additionally, there are occasions when the activist seeks and secures board representation through proxy fights. In those instances, the distraction related to the activist can last for years.

What can banks do to prepare for a potential activist overture?

• Proactively evaluate the bank’s articles of incorporation, bylaws and other governing documents to assess if there are possible structural vulnerabilities.
• Conduct regular shareholder composition analysis and surveillance to understand which investors are buying and/or selling shares in the bank.
• Use the investor relations effort within the bank to prepare a shareholder activism public communications plan, including talking points and key rebuttal documentation, which can be implemented once the campaign is publicly launched.
• Regularly evaluate corporate governance enhancements to improve governance and help protect from outside criticism.
• Establish long-term legal and financial advisers who can annually debrief the board on the activist landscape and areas where the bank may have vulnerabilities
• Reach out to the bank’s largest shareholders on a regular basis to discuss performance and garner feedback. Proactive shareholder engagement is the antidote to dissident shareholder activity.

Preparation and good daily business focal points go hand in hand. While an activist campaign can become a distraction for bank management teams, a front-footed, proactive response can turn a negative into a positive.

The activist, the broader shareholder base and the bank’s management team all want the same result — an improved stock price. While the activist’s scrutiny may be unwelcome, that doesn’t mean their concerns are without merit. An encounter with a shareholder activist can make the company stronger in the long run if handled effectively.

Having an action plan in place before a public effort is launched will help minimize the emotion of the moment and allow the team to productively educate the investor and the market. The Scouting America motto “Be Prepared” should be fully adopted by both the management team and board of directors of every U.S. bank.