Two CEOs Dish on the State of Banking and M&A

Heading into 2026, there is a sense of optimism within the banking industry — credit quality remains strong, regulators seem open to deals and the environment is ripe for more consolidation. 

At least that was the attitude of Neal Arnold, CEO of Sunflower Bank in Dallas, and Rory Ritrievi, chair and CEO of Mid Penn Bancorp in Harrisburg, Pennsylvania, when they were interviewed last week in advance of their appearance at Bank Director’s upcoming Acquire or Be Acquire Conference in Phoenix. 

Ritrievi and Arnold predicted that the industry should see more bank acquisitions announced in 2026. Last year, there were 181 deals announced, valued at $49.4 billion, according to data from S&P Global Market Intelligence. That was the best year for bank M&A since 2021. 

Both CEOs are experienced acquirers. The $8.5 billion Sunflower, a subsidiary of FirstSun Capital Bancorp, has acquired four banks since 2010 and is in the process of buying the $11.9 billion First Foundation in Irving, Texas. The $6.3 billion Mid Penn is in the process of buying its seventh whole bank, the $843 million 1st Colonial Bancorp in Mount Laurel, New Jersey, in 11 years.  

Given this experience, Bank Director interviewed Ritrievi and Arnold about their expectations for M&A this year, their advice on how to successfully integrate a deal and the potential effects of President Donald Trump’s current feud with Federal Reserve Chairman Jerome Powell. The following is a shortened, edited transcript of separate interviews with Arnold and Ritrievi. 

BD: What are your predictions for bank M&A in 2026?
Arnold: It certainly feels robust on the front end. I think the combination of an administration that embraces it, along with the reality of banks needing to be of a bigger size, drive that. But I would also say the economic environment, as long as credit is benign or rates don’t go up dramatically, you’re going to see more M&A activity. It’s likely to be more robust early, whereas last year, everybody kind of had a tariff pause at the beginning of the year.

Ritrievi: Based upon what I’ve seen so far and what I hear from talking to investment bankers, I think they all feel that because of the regulatory environment that there’s going to be a fair bit of M&A this year. It might end up being 200 to 250 deals either completed or announced. 

BD: Trump recently accused Powell of mismanaging the renovations at the Federal Reserve headquarters. Powell fired back that Trump was trying to influence monetary policy. Could this affect dealmaking?
Arnold: No one likes a new element of uncertainty. Uncertainty is never your friend when you’re thinking about transactions. Certainly, for those of us in the industry, having a Fed that’s independent and unimpeded is an important part of the puzzle.

Ritrievi: Bankers have to focus on doing their jobs, which is making loans, getting deposits, conducting fee activity, cutting costs. But that issue between the administration and the Fed is not good news for anyone. The sooner we can get stuff like that in the background is just better for everyone. But I don’t think it will specifically impact M&A. 

BD: How do you ensure you have a smooth transition during an integration?
Arnold: We tend to buy more distressed situations. My basic philosophy is if you buy a great bank during great times, you tend to pay a higher price. Projections tend to go up from there. You have more things that you could miss on. If you buy a more distressed bank, not only is the price cheaper, but your projections tend to be more reserved. There’s a better opportunity to overachieve. That’s my simple math. Beyond that, I’d say picking the right targets. Credit and culture are things you don’t want to compromise on. 

When most people think about integrations, they think about computer systems, products and policies. Those are all important. But I would say the people part is the most important one, and making the best decisions that you can early and communicating those. Doing that well is vitally important. 

Ritrievi: You have to have the right people. I’ve got great people. My chief financial officer, Justin Webb, has been the architect of all of our transitions since our very first one back in 2015. He assembles a good team of professionals throughout the company, whether they’re in operations, compliance, risk, administration or even business development. He puts the right teams together. 

Also, that first deal we did was really small. We had some training wheels on in the beginning. Now all these years later, we’re a grizzled veteran. If I were giving anyone advice on that, I would say, start small and make sure that you build good game plans and know that they’re not going to be perfect. 

BD: What’s your biggest piece of advice in terms of potential acquirers out there trying to navigate this current environment?
Ritrievi: Prior to that first time, I had no experience in M&A whatsoever. None. I had never worked for a bank that sold. I had never worked for a bank that really bought another bank. When we decided that M&A was a good side strategy to our core strategy, we had to learn. I built a game plan — I wasn’t going to go out and start calling on a bunch of other banks and say, “Sell your bank to me.” I was just going to build some relationships with other bankers. I would work those relationships for years and then they would bear fruit. I didn’t build those relationships thinking that they were going to sell to me at some point. I was building those relationships because I thought I might be able to help them; they might be able to help me at some point. 

Arnold: I often tell people, don’t assume you’re going to solve your problems by doing a deal. The best thing is to have clarity of what you are and what you aren’t. Be visible and communicate often to help people navigate it. The deals that work are when you end up being a single team. The deals that work the worst are when you stay fractured. You’re either part of that team or part of this team. 

BD: What do you think of the overall banking environment right now? Do you see any red flags?
Ritrievi: The industry has had a pretty good run on credit. That doesn’t mean there haven’t been losses, but those losses have been very, very controlled for several years now. Banks learned a lot of lessons after the Great Recession. The biggest challenge is funding. Banks are trying to persuade businesses, nonprofits, municipalities and consumers that banks are still a good place to keep your money, and not to put it in crypto or something else. I think that’s probably our biggest challenge, and it’s not something that will be easy to deal with.

Arnold: Anytime you have either interest rates or the economy doing well for a long period of time, you tend to have excess. We’re seeing some cracks in new construction multifamily in some markets that have been hot. But at the end of the day, execution needs to be the piece that you keep people the most focused on. I can’t do anything about the economy. Our success is focused on how well we all execute, and making sure we have a clear playbook.

BD: Where do you see a lot of growth in lending this year?
Arnold: I love the Southwest. I think it’s one of the most robust economic regions in the country. There’s a lot of business activity. And I trust middle market America. I think that’s still the growth engine to the economy. There aren’t a bunch of people who are Elon Musk, but there are a lot of people who are really important to their communities and they’re driving business growth. Focus on the clients doing that. 

Ritrievi: If interest rates continue to move in the right direction, then the residential mortgage business will pick up. It’s not going to come back to where it was in 2021 or even the beginning of 2022. But it can increase a bit more. I think commercial real estate’s going to continue to be strong. We aren’t doing loans in a central business district with high rise office buildings. But there is the need to provide credit for suburban owner-occupied office space. I think [commercial and industrial] loans will probably be good this year. 

BD: What do you see as the biggest technology or fintech change over the next 18 months?
Ritrievi: I think that AI is absolutely 100% the biggest thing that all bankers should be talking about. Is it possible today that you could simplify the underwriting process so much that you could create a write up in 15 minutes, something that previously would take days, weeks or maybe even months? The answer to that is absolutely. If it’s not quite there yet, it’s getting there. We utilize AI at Mid Penn in our underwriting process to spread statements [copy borrower data into analytical software]. But we don’t let new analysts do it that way because we need them to understand how to actually spread statements. But our experienced analysts, we’re allowing them to use AI to make that process go faster. 

I don’t want to use AI 100% in the underwriting process, because I don’t want to replace commercial lenders completely with AI. I don’t think that’s good for society. I still think it’s important to have lenders who are credit trained, who can sit down and look at financials and meet with the people and quickly determine whether it’s a deal we should pursue. I still think that that’s the differentiator for community banks.

Arnold: The payment system is changing. Now, is it changing for the better? I worry that we could have fads. I don’t want to have an oil spill on the payment side where clients lose money. To me, tokenization and blockchain are important and real. I worry about some of the pieces where stable value is not the underlying piece. Innovation in payments is long needed.