US bank M&A activity was resuscitated in August with the most monthly deal announcements in over a year.

US banks announced 18 deals last month, the most in one month since July 2022, which saw 19 announcements. Now, 26 deals have been announced so far in the third quarter, beating out the first- and second-quarter totals of 20 and 25, respectively, just two months into the quarter.

Deal value has also surged so far in the third quarter, sitting at $2.08 billion through Aug. 31, compared to just $197.1 million in the second quarter and $432.8 million in the first quarter.

The faster pace of M&A in August is a sign that banks are becoming more comfortable with dealmaking.

"About a month or two ago, conversations started to start back up, and they've gathered momentum," Christopher Olsen, managing partner at Olsen Palmer LLC, said in an interview in August. "It's certainly getting quite warm, really on both sides of the table."

However, yearly activity still lags behind historic numbers because of the skidding start to the year. Only 72 US bank deals have been announced year to date through Aug. 31, less than half of the 164 deals announced in 2022, and the total deal value of $2.71 billion is less than a third of the $9.03 billion in all of last year.

August activity

Credit unions helped to boost the number of bank deals announced in August after they went on a bank buying spree with five deals in one week. Now, credit unions account for buyers in nearly 14% of the 72 deals announced through Aug. 31.

The largest deal announced in August was the $371.5 million merger of equals (MOE) between Alexandria, Va.-based Burke & Herbert Financial Services Corp. and Moorefield, W.Va.-based Summit Financial Group Inc. It is also the third-largest US bank deal of the year and the largest MOE since 2021.

With four MOEs announced so far this year, those deals make up 6% of all US bank deal activity, the highest percentage in two years.

Bank deals by region, state

Of the 72 deals announced year to date through August, 33 of the banks targeted were headquartered in the Midwest, making it the most targeted region.

The Southeast, which is the second-most-targeted region, added six targets in August, bringing its year-to-date total to 16 banks. The Southeast is a hotspot for credit union-bank deals, with three of the last five such deals happening in that region.

The South Central region also added two target banks in August, with both targets headquartered in Louisiana. The Pelican state had a total of four target banks this year at the end of August, tying it with Ohio for the third-most-targeted state.

– Access the S&P Capital IQ Pro M&A summary page for US financial institutions. – Access a list of pending and completed M&A deals announced since Jan. 1, 2022. – Read more M&A news.

Kansas remained the second-most-targeted state with five deals this year, while Illinois is still the most-targeted state with 11 deals. Three of those 11 banks were scooped up by credit unions, including two deals in one week from out-of-state buyer Michigan State University FCU.