The M&A environment became more challenging in the past month, but some US banks are not letting that stop them.
Recent market turmoil surrounding President Trump's tariff plans significantly impacted bank stock prices and increased economic uncertainty, hindering ongoing deal discussions. But several bank executives remain resolute and ready to pursue M&A opportunities, according to recent earnings call commentary and a wave of recent activity.
"The volatility in the market causes people to sit back and think, but ... transactions are going to continue to happen. Consolidation is going to continue to happen in the marketplace," said Cadence Bank Chairman and CEO James Rollins III in an April 22 earnings call, just days before the company announced a deal to acquire Industry Bancshares Inc.
The Cadence-Industry tie-up capped off a string of large US bank deal announcements the week of April 21. Columbia Banking System Inc. kicked off the wave with its $2.04 billion purchase of Pacific Premier Bancorp Inc., the largest US bank deal so far this year, and Eastern Bankshares Inc. followed with its $481.8 million acquisition of HarborOne Bancorp Inc., the second-largest deal announced this year.
Cadence Bank's purchase of Industry Bancshares was its second deal announcement of 2025. Its first, an acquisition of FCB Financial Corp., secured regulatory approvals within only 61 days. The outlook for swifter closing timelines, thanks to faster regulatory approvals, is one reason banks are eager to strike deals.
"How long has it been since we saw a deal get done in 60 days? It's been the last Trump Administration. So it is a positive for banks, certainly as a positive for banks," said Home BancShares Inc. Co-Founder, Chairman and CEO John Allison. "I'm excited. Thinking you can close a deal in 60 days, that really gets pretty exciting."
The more favorable regulatory environment is encouraging Home BancShares to pursue two or even three bank deals at a time, Allison said.
Even with a rosier regulatory environment, tariff-driven US bank stock sell-offs in the beginning of the month largely stalled M&A talks as buyers' currencies took a hit. Still, some would-be buyers are hopeful they can find sellers that can look past the industrywide sell-off.
Though Prosperity Bancshares Inc.'s stock price is nearly $20 below the $85 high seen in November 2024, it believes it can find sellers that are sophisticated enough to take its stock, knowing the price will bounce back, executives said.
"I think that we'll still be able to do deals because people have seen the volatility," said Senior Chairman and CEO David Zalman. "We were dealing with some of the same people a few years ago where our stock price dropped to $55. And so they've seen us, they've watched us. And I think that they feel comfortable that if they take our product based on our stock price where it is today, they'll be fine."
Prosperity is currently having conversations and believes it can find the right partner who can see that "we've all moved in concert with each other as a group, [so] exchange ratio math doesn't change. It's just relative math," President and COO Kevin Hanigan said. "Most really knowledgeable CEOs end up getting over the psychology of it all," he added.
Equity Bancshares Inc., which still hopes to strike two to three deals this year, also believes sellers will be able to overlook the current lower prices.
"If you actually are taking other people's stock, a great time to take it is not at the high of the market, but when it's got more upside in it," Chairman and CEO Brad Elliott said. "While banks are typically sold rather than bought, we are seeing active conversations at a level we haven't experienced in recent years. We have numerous opportunities that could yet be announced this year," Elliott added.
CVB Financial Corp. believes that recent industry developments, such as the deal between Columbia and Pacific Premier, creates more opportunity for M&A and opens possibilities for the company to capitalize on market disruptions.
"That announcement yesterday puts us in a better position, even more so to be the acquirer of choice. So I think that's a positive for us," said CVB President and CEO David Brager. The California-based bank hopes to strike a deal this year, he added.
However, not all bank executives were optimistic about M&A picking up amid the difficult deal environment.
Top executives at Comerica Inc. and United Community Banks Inc. said they do not expect to see a lot of M&A in the next 12 to 18 months.
"Frankly, until the market turns around in terms of prices, I don't see much happening for some of the reasons you mentioned: A, buybacks are more attractive; B, a lot of the banks that we would talk to, the smaller banks, they tend to focus on a certain number versus an exchange ratio and the numbers today, that just don't work," said United Community Chairman and CEO Herbert Lynn Harton.
PNC Financial Services Group Inc.'s top executive also thinks M&A is unfeasible right now.
"In today's world, for a variety of different reasons, not the least of which is we wouldn't issue our shares at ... these relative prices, nobody is a seller," Chairman and CEO William Demchak said. "To try to do a deal with the volatility going on in rates right now and the potential mark on credit makes it impossible."
