Market pressures and a regulatory rollback have triggered a wave of regional bank M&A that appears likely to continue in the year ahead.

Regional bank deals hit a 20-year high in 2019. Regional banks — defined as having between $10 billion and $50 billion in assets — were involved in 35 deals, the highest number since 1999. The 2019 activity included five transformative deals that reshaped the regional bank space and laid the groundwork for a potential slew of multibillion-dollar mergers-of-equals. Chemical Financial Corp. and TCF Financial Corp. kicked off the year, the merger between BB&T and SunTrust to become Truist Financial Corp. was the biggest bank deal in a decade, and Independent Bank Group Inc. and Texas Capital Bancshares Inc. closed out the year of the MOE.

"I think you're going to see a lot more of these. I think we'll see six or a dozen more of these in the next year," said Brett Rabatin, senior research analyst for Piper Jaffray Cos.

Bankers might have a short window to get those deals done. Regional bank M&A is experiencing something of a sweet spot after regulators lifted a key asset threshold. But that could change after the 2020 elections, leading to some predictions that large deals will be front-loaded in the year ahead. Meanwhile, the market dynamics driving regional bank M&A remain very much in place, as analysts and investors point to a tough operating environment and the imperative to invest in technology as key drivers of regional bank consolidation.

"Net interest margin pressures along with technology spending have both contributed to management teams and boards being more interested in exploring combinations as a way to combat these two pressures," said Joe Stieven, CEO and founder of bank-focused investment firm Stieven Capital Advisors.

With the Federal Reserve cutting rates, banks have lowered their expectations for net interest income, a primary revenue source. Meanwhile, retail consumers have increasingly relied on mobile banking and the nation's massive money-center banks — JPMorgan Chase & Co., Bank of America Corp. and Wells Fargo & Co. — have each said they spend billions of dollars a year on technology. Deals can address both issues by providing cost savings or revenue synergies that benefit the bottom line and offering greater scale that allows the company to up its technology spend.

At the same time, investors said banks should approach large-scale MOE with caution. Social issues, such as the roles for executives in the merged bank or the new company's name and headquarters location, can derail these deals.

"You can't just put two $20 billion companies together and say, 'This is a good deal,'" said Anton Schutz, senior portfolio manager with Mendon Capital Advisors Corp., an investment firm focused on banks.

A regulatory rollback law passed in May 2018 enabled the recent wave of regional bank deal-making. The Economic Growth, Regulatory Relief and Consumer Protection Act — also known as the Crapo bill after Sen. Mike Crapo, R-Idaho — raised the $50 billion asset threshold at which banks become subject to heightened regulatory scrutiny.

Several banks had talked about limiting their growth to stay under that threshold. Now that the asset cap has increased and some banks have taken the opportunity to pursue MOEs, analysts and investors say they expect more to come.

"I would argue the momentum is real," said Christopher McGratty, managing director of equity research for Keefe Bruyette & Woods. "There has been a real logjam of banks at this asset level."

Investors said banks are less likely to pursue a traditional takeover deal. The market has reacted negatively to high-premium transactions where a large bank buys a smaller one at a price above market value. The market has made it clear that expensive deals will lead to sell-offs, Stieven said.

Instead, bankers are focusing on larger deals that carry little to no premium. The market has been cautiously receptive to the recent spate of low-premium MOEs. Stieven said MOEs are tricky to predict but that conversations about potential tie-ups are on the rise.

"The amount of dating activity — or amount of people willing to have a drink with each other — is exceptionally high," he said.

Investors and analysts said they expect more deal activity in the first half of 2020 since the presidential election could discourage deal-making in the second half.

"This is as good as it gets in terms of getting deals accepted," McGratty said. "And that could change with a shift in the political landscape."

Some bankers have expressed concerns about Sen. Elizabeth Warren, D-Mass., winning the presidency given her history of bashing large banks. Schutz said bankers interested in pursuing a large MOE should be wary even if Warren's campaign starts to fizzle in primary season.

"If they want to do it, they better get done with it in the first quarter," Schutz said. "If you end up with a sweep [of Congress and the White House] by the Democratic party, there's no way these deals get approved. Warren will still have the pulpit even if she doesn't have the presidency."