What Acquirers Want: Deposits and Cultural Alignment

Bank M&A rebounded in 2025, and the year ahead promises to be an equally conducive environment for bank deals. For many prospective buyers, however, the biggest obstacle may be finding the right bank to buy.  

Almost half of the executives and board members responding to Bank Director’s 2026 Bank M&A Survey said they would be somewhat (28%) or very (17%) likely to buy another bank in 2026. However, 71% of potential acquirers identified a lack of suitable targets as a top barrier to making an acquisition, right behind the pricing expectations of sellers (74%). 

“This suggests that a lot of banks are looking for a deal if it’s the right fit, but it’s a challenge to find a suitable target with the right pricing expectations, in your desired market and with the attributes you’re seeking such as an attractive deposit base, complementary culture and relative size,” says Kevin Brand, strategy and transaction advisory partner with Crowe, which sponsored the survey. 

To some extent, a suitable target is in the eye of the beholder, but experienced dealmakers stress a few key commonalities. The size of the deal — or more specifically, the deposit base — needs to be worth the time and effort of executing a transaction. And perhaps more challenging, the cultural fit has to be right. 

“M&A is a lot of work, regardless of the size,” says Mike Daniels, CEO and chairman of Nicolet Bankshares in Green Bay, Wisconsin. Currently at $9 billion of assets, Nicolet will grow to roughly $15 billion once it completes its pending acquisition of Iowa City, Iowa-based MidWestOne Financial Group, which is slated to close sometime in the first half of the year.

Daniels says when Nicolet is looking to buy a bank, it looks first at whether a target is a lead player in its local markets and second, whether its business complements Nicolet’s. Nicolet has a strong focus on commercial and industrial lending along with some wealth management and private banking products, what Daniels describes as “chocolate and vanilla banking.” The bank is unlikely to make a deal to acquire specialized verticals or commission-based businesses. 

Complementary strengths also brought the fintech lender Enova International and Grasshopper Bancorp together, says Grasshopper CEO Mike Butler. The $1.4 billion Grasshopper Bank, based in New York, has demonstrated a strong track record for gathering deposits, and that meshed well with the Chicago-based Enova’s strategic vision. 

“Our strategic plan was to become a digital lender. We had already done the digital deposit side, and [Enova’s] view was they had to start gathering deposits digitally,” Butler says. “Bringing it together was a real revenue synergy.” The deal is expected to close in the second half of 2026.

Bank executives and directors who participated in the 2026 Bank M&A Survey said an attractive deposit base (70%), complementary culture (54%) and efficiency gains (50%) were their top qualities in an acquisition target. Fintech firms are increasingly interested in attaining bank charters and are likely to be among prospective buyers in the year ahead. In addition to the charter and deposit base, fintech buyers may also appreciate a target bank’s embrace of technology, particularly when used to create operational efficiencies and strong cultural synergies. 

Prior to Grasshopper, Butler ran Radius Bank in Boston, Massachusetts, another digital-first bank. He eventually sold Radius Bank to LendingClub Corp. in 2021. Butler describes some shared elements that have made both Grasshopper and Radius attractive to fintech buyers. Both organizations had a focus on serving tech-savvy customers, and both had strong deposit growing capabilities. Grasshopper also runs on a decentralized organizational structure, in which its business units make decisions on their own quickly, rather than running those up the chain of command. That type of culture appealed to Enova, which initially approached Grasshopper about a year ago at Bank Director’s Acquire or Be Acquired conference, Butler says. 

A lending business is valuable insofar as it comes attached to broader banking relationships, including loans. Butler adds that in any bank merger, deposits are generally going to be more valuable than loans or fee income, which can run counter to some executives’ expectations. “I think that’s still a mentality,” he says, “[that] the answer is always to generate more loans or generate fee income from loans, whereas the real answer is to get more deposits.”

Daniels at Nicolet agrees. “The most valuable thing a community-based bank can do is increase its level of noninterest bearing deposits and work on low cost deposits that have a relationship component,” he says. “Increase your low cost consumer deposits across your branch footprint, because that’s the jet fuel every bank wants. It runs the industry.”