Seven US bank M&A deals were announced in September, bringing the year-to-date total to 79 transactions, compared to 122 deals announced in the same period in 2022.

Aggregate deal value fell to $3.39 billion, from $6.36 billion in the year-ago period, according to S&P Global Market Intelligence data.

A total of 34 deals were announced in the third quarter, beating the first- and second-quarter totals of 20 and 25, respectively. The aggregate deal value surged to $2.76 billion in the third quarter, compared to the first and second quarter's combined aggregate deal value of $629.9 million.

The median deal value-to-tangible common equity for deals announced in the third quarter was 122.6%, the second-lowest quarterly mark since the fourth quarter of 2020.

Eastern Bankshares' pair

Boston-based Eastern Bankshares Inc. on Sept. 19 announced the acquisition of Cambridge, Mass.-based Cambridge Bancorp for $527.1 million, marking the second-largest US bank M&A deal so far this year. The transaction had deal value-to-tangible common equity of 114.5%.

Eastern struck a deal that same day to sell its insurance agency, Eastern Insurance Group LLC, to Arthur J. Gallagher & Co. for roughly $510 million in cash. The divestiture was done to capitalize on high insurance valuations and depressed valuations in the banking space, according to management.

"The decision to sell Eastern Insurance was made to capitalize on its strong valuation and allow us to focus on the growth and strategic initiatives of our core banking business, such as the merger with Cambridge," Eastern Bankshares Chairman and CEO Bob Rivers said during a deal call.

Another in-state deal in Massachusetts

On Sept. 21, Hyannis, Mass.-based Mutual Bancorp. and Leominster, Mass.-based Fidelity Mutual Holding Co. announced a merger of mutuals. Once the deal closes, Mutual Bancorp will have combined assets of more than $7 billion and will oversee the strategic operations of both banks.

The Bay State has had three banks targeted this year, tying it with Pennsylvania as the most-targeted state in the Northeast.

On Sept. 27, Scranton, Pa.-based Peoples Financial Services Corp. announced the acquisition of Dunmore, Pa.-based FNCB Bancorp Inc. for $128.2 million, with deal value-to-tangible common equity of 101.8%.

Bank deals by region, state

The Midwest's 36 deal targets accounted for nearly half of all M&A transactions announced this year.

Midfed Acquisition Corp., a newly formed corporation headed by an investor group, on Sept. 12 announced the acquisition of Bridgeview, Ill.-based Midland Capital Holdings Corp. for $12.1 million, marking the 12th Illinois bank deal announced this year, the most of any state.

US bank acquisitions by investor groups have accelerated this year as a faster and cheaper way to enter the banking space, given depressed bank valuations and the costly and time-consuming process of starting a de novo bank.

Pascagoula, Miss.-based Merchants & Marine Bancorp Inc.'s announced acquisition of Belle Chasse, La.-based Mississippi River Bank on Sept. 30 was the fifth bank deal announced this year in the Pelican State, tying it with Kansas for the second-most-targeted state.

Meanwhile, Colorado had its second target bank this year with Iowa City, Iowa-based MidWestOne Financial Group Inc.'s announced acquisition of Denver Bankshares Inc. for $32.6 million.

During a deal call, CEO Charles Reeves said MidWestOne will fund the transaction with proceeds from the planned sale of its Florida operations to Dearborn, Mich.-based DFCU Financial as the bank has not reached the scale needed to drive growth in the Sunshine State but aims to achieve critical mass in Denver.

– 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.

US bank M&A resurgence

The surge of US bank M&A activity will likely be undeterred even as investors punish deals with outsized dilution as a result of rate marks.

At a recent industry conference, community bankers said diversification and a regulatory asset thresholds are top-of-mind as they craft their M&A strategies.