US bank M&A deals hit another monthly low in 2023 with only four deals announced in May.

In the year through May 31, there were 32 US bank M&A deals announced, fewer than half of the 66 deals announced over the same period in 2022. Aggregate disclosed deal value fell to $580.2 million, from $2.99 billion in the year-ago period, according to S&P Global Market Intelligence data.

LCNB expands footprint in southern Ohio

On May 18, Lebanon, Ohio-based LCNB Corp. announced it would acquire Cincinnati Bancorp, Inc. for $44.7 million at a deal value-to-tangible common equity ratio of 117.0%. The transaction marks the seventh acquisition for LCNB since 2011.

The deal is expected to close in the fourth quarter, pushing LCNB to an estimated $2.23 billion in assets upon completion and giving the bank a larger footprint in the Cincinnati area where it already has an established customer base. It will also give the bank its first branch outside Ohio as it picks up Cincinnati Bancorp's branch in Florence, Ky.

Midwest region adds 3 more targets

Three of the banks targeted in May were headquartered in the Midwest, pushing the region's total number of targets this year to 19.

LCNB's announcement also marked the fourth time an Ohio bank has been targeted this year, making it the second-most popular target after Illinois at five.

– 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.

Missouri was targeted a second time this year as Platte City, Mo.-based Wells Bancshares Inc. announced its acquisition of Ashland Mo.-based Connections Bancshares Inc. on May 12.

Meanwhile, Minnesota had its first target bank with Annandale, Minn.-based Lake Central Financial Inc.'s announced acquisition of Benson, Minn.-based State Bank of Danvers, a subsidiary of West 12 Bancorp Inc., on May 10.

Bank M&A likely to remain muted

Even as bank regulators may be opening up to the idea of easing stringent bank M&A reviews after the recent bank failures, "Open bank deals, today with rate marks, aren't feasible ... for almost anybody," PNC Financial Services Group Inc.'s CEO said during an industry conference.

In addition, at S&P Global Market Intelligence's 2023 Community Bankers Conference, industry experts including current regulators said regulatory compliance issues relating to the Community Reinvestment Act (CRA) and fair lending, as well as anti-money laundering practices and the Bank Secrecy Act (BSA) can often lead to prolonged deal closing timelines or even terminations.

"We've had two transactions that were taken off the market, or stalled out, one or the other, because of BSA and CRA issues, and in one case, they've been given time to get their act together, and in the other case, they were told to just withdraw, get their act together and then come back to it," Craig Mueller, a managing director and co-head of the financial institutions group at Oak Ridge Financial, said in an interview.