Bank M&A slowed sharply year over year in the first four months of 2023.

In the year through April 30, 28 US bank M&A deals were announced — less than half the total announced over the same period in 2022. The aggregate disclosed deal value fell to $535.5 million from $2.00 billion. Eight transactions were added in April with an aggregate value of $102.7 million, according to S&P Global Market Intelligence data.

Deal valuations touch multiyear low

The median deal value-to-tangible common equity ratio for bank deals announced in the first four months of 2023 was 132.3%. That marks the lowest valuation level since the third quarter of 2020.

Illinois credit union makes another bank deal

Decatur, Ill.-based Land of Lincoln CU on April 28 announced it would acquire Nokomis Savings Bank, marking the second bank acquisition announced by a credit union in 2023. There were 16 such deals announced in full year 2022.

In December 2022, Land of Lincoln announced it would acquire substantially all of the assets and liabilities of Illinois-based Colchester State Bank in a deal expected to close in the second quarter.

Once both deals close, Land of Lincoln will have approximately $482 million in total assets and an expanded footprint in Illinois.

Midwest remains most-targeted region, followed by the West

Of the 28 deals announced year to date through April, 16 had targets headquartered in the Midwest region. Illinois had five target banks, making it the most-targeted state in the US.

Arizona banks were targeted twice, pushing the total number of targets in the West in 2023 thus far to five.

– Access a list of pending and completed M&A deals announced since Jan. 1, 2012. – Access the S&P Capital IQ Pro M&A summary page for US financial institutions. – Read more M&A news.

Leawood, Kan.-based CrossFirst Bankshares Inc. on April 21 announced its planned acquisition of Tucson, Ariz.-based Canyon Bancorp. Inc. for $15.1 million, giving it a deal value-to-tangible common equity ratio of 95.4%.

Six days later, Scottsdale, Ariz.-based Bancorp 34 Inc. announced it would acquire CBOA Financial Inc., also based in Tucson, for $27.9 million at a deal value-to-tangible common equity ratio of 95.1%. The deal is expected to close in the fourth quarter.

Mergers of equals on the rise

As the banking industry continues to battle battered stock prices and low M&A activity due to recent bank failures and regulatory hurdles, mergers of equals have become more attractive for community banks.

On April 18, Bloomsburg, Pa.-based CCFNB Bancorp Inc. and in-state peer Muncy Bank Financial Inc. announced a merger of equals for $59.6 million, making it the third announced merger of equals so far in 2023.

Regulators seem more open to more bank M&A

Recent public comments from regulators have hinted at a potential openness to bank M&A after years of heightened scrutiny for large bank deals have led to prolonged deal timelines. Recent bank failures forced regulators to lean on large industry players to acquire the assets and liabilities of failed banks in order to offset costs to the Deposit Insurance Fund. The acquisitions of the failed bank assets included buyers involved in some of the longest US bank deal closings.

Separately, a potential US regulatory issue could have been the catalyst for the termination of The Toronto-Dominion Bank's $13.67 billion planned acquisition of Memphis, Tenn.-based First Horizon Corp., the largest US bank deal termination in history.

A number of factors, including "the current regulatory and political regime, TD's status as a global systemically important bank, the cross-border nature of the transaction and idiosyncratic components of TD's business model" could have forced the termination, according to Christopher Olsen, a managing partner at Olsen Palmer LLC.

TD declined to comment on the termination beyond a press release.