Two of the eight US bank M&A deals announced in July were the biggest deal announcements of the year and significantly boosted the total value of US bank M&A in 2023.

Year-to-date aggregate deal value soared to $2.15 billion for all 51 deals announced through July, with the two deals accounting for 70% of total deal value.

Still, bank M&A is tracking behind the year-ago totals. There were 98 deals announced over the same period in 2022, with an aggregate deal value of $4.00 billion, according to S&P Global Market Intelligence data.

2 largest deals of 2023 announced in one day

On July 25, Richmond, Va.-based Atlantic Union Bankshares Corp. announced the acquisition of Danville, Va.-based American National Bankshares Inc. for $443.7 million with a deal value-to-tangible common equity ratio of 184.2%, making it the second-largest deal of 2023.

American National Bankshares' size and loan portfolio duration made it an attractive target for Atlantic Union Bankshares. "American National does not do long-term fixed-rate loans. Typically five years or less is what they do. And that's part of why the math is working here and the rate marks are manageable. That, of course, plus the fact that they're 15% of the asset size. So this will come back quickly in terms of the rate marks," Atlantic Union CEO John Asbury said during the company's second-quarter earnings presentation.

The deal was immediately followed by Beverly Hills, Calif.-based PacWest Bancorp's announcement of a reverse merger with Santa Ana, Calif.-based Banc of California Inc. for $1.06 billion, making it the largest deal of 2023 thus far. The deal came at a time when the Golden State has been rocked by M&A and bank failures in the past year. The combined company, which will be the third-largest commercial bank headquartered in California, intends to capitalize on that disruption.

"During this time period, we have seen many other banks either completely exit or significantly pull back from California. As a result, there is a sizable opportunity for a skilled commercial bank with a high level of service and expertise to capitalize on this disruption, by adding clients and increasing market share," Banc of California CEO Jared Wolff said on the bank's second-quarter call.

Midwest still the most targeted region, followed by Southeast

Of the 51 deals announced year to date through July 31, 26 of the banks targeted were headquartered in the Midwest, making it the most targeted region.

Meanwhile, the Southeast, which is the second-most targeted region, added three targets in July, bringing its year-to-date total to 10 banks.

The South Central also added three target banks in July, with two of three targets headquartered in Texas. The Lone Star state had a total of three target banks this year at the end of July, making it the fourth-most targeted state in the US.

– 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 about the Banc of California and PacWest merger.

Illinois is still the most targeted state with six target banks, while Kansas is in the second spot with five targets, overtaking Ohio which had four targets at the end of July.

Louisiana was targeted for the second time this year with Morgan City, La.-based MC Bancshares Inc.'s announced acquisition of Covington, La.-based Heritage NOLA Bancorp Inc. for $26.6 million with a deal value-to-tangible common equity of 122.6%.

Several banks sound off on future M&A

Winter Haven, Fla.-based SouthState Corp.'s CEO John Corbett sees headwinds for M&A in the short term, but potential for future bank deals.

"In the short term, there are obvious headwinds. The economic uncertainty, the interest rate marks on this deal math and then the regulatory approval process is just too long," Corbett said on an investor conference call. "So that's the short term, but from a long-term standpoint, the logic is there. If we've got an inverted yield curve and there's continued revenue pressures, and we're starting to see ... dispersion of multiples that could drive good accretion in M&A."

Stuart, Fla.-based serial acquirer Seacoast Banking Corporation of Florida, which has grown its footprint in all major Florida markets through M&A, plans to focus on growing organically for the rest of the year and return to sealing bank deals in 2024.

Seacoast's focus will still be on the Sunshine State, as CEO Charles Shaffer believes that "the highest and best franchise value for Seacoast is consolidating market share in Florida."

Meanwhile, Marietta, Ohio-based Peoples Bancorp Inc. hopes to cross $10 billion in total assets through M&A. CEO Charles Sulerzyski said that the bank is currently involved in deal conversations with banks of varying sizes, though "we're in no hurry to cross $10 billion."

Bank M&A discussions are also being considered at Wichita, Kan.-based Equity Bancshares Inc. as CEO Brad Elliott hopes it can score a deal after "putting off" deals for the past few years.

While PNC Financial Services Group Inc. continues to look at small acquisitions "that might augment our client offerings," CEO William Demchak said on an earnings call. However, he added that "the volume of things that are being shown to us has actually probably increased [while] our appetite to do them has probably decreased a little bit at the margin."