Renasant Corp.'s proposed $1.18 billion acquisition of The First Bancshares Inc. is the third $1 billion-plus bank deal in three months and the fourth-largest deal since the start of 2022.
The all-stock transaction continued a string of high-value deal announcements in 2024, outpacing 2022 and 2023, which had one bank deal valued at $1 billion or more apiece. The uptick coincides with a rally in bank stocks relative to the S&P 500 that some bank executives predict could spur deals.
String of large deals
Half of the 10 largest bank deals since the beginning of 2022 have been announced in 2024, according to S&P Global Market Intelligence data. Of the five largest deals in 2024, all have been made public since April 15, when Wintrust Financial Corp. announced its planned acquisition of Macatawa Bank Corp. for $512.4 million.
At the end of April, UMB Financial Corp. announced its plan to purchase Heartland Financial USA Inc. for roughly $1.99 billion, in what at the time would have been the largest US bank deal since the end of 2021. Less than a month later, SouthState Corp. announced a $2.02 billion acquisition of Independent Bank Group Inc.
The fourth- and sixth-largest deals since 2022, the Renasant-First Bancshares deal and WesBanco Inc.'s proposed $959 million acquisition of Premier Financial Corp., were announced three days apart.
Signs of recovery
2021 marked a recent peak for bank M&A, with $67.08 billion in total disclosed value and 10 deals with announced values over $1 billion.
Industry headwinds depressed bank M&A in subsequent years, but several bank executives said in their second-quarter earnings calls that they believe the market is coming to life.
"As buyers and sellers make progress to close the valuation gap, we expect that we are still in the early innings of an investment banking rebound," Sharon Yeshaya, CFO of Morgan Stanley, said on the company's July 16 earnings call.
Rising market
The announced deal value of US bank M&A in 2024 nearly tripled between April 30 and July 30. As of July 30, five deals larger than $500 million had been announced in 2024, more than were announced in 2022 and 2023 combined.
The increase in large deals comes as the market prepares for an eventual interest rate cut from the Federal Reserve, and pent-up demand begins to release due in part to recent rise in bank valuations.
The KBW Nasdaq Bank Index steadily rose in price since mid-June, surpassing the S&P 500 in mid-July. Some bank stock prices rose 20% to 30% during this period, giving sellers the ability to realize higher returns and buyers more capital to spend.
Some bank executives, including Equity Bancshares Inc. Chairman and CEO Brad Elliott, said in recent earnings calls that deal conversations will increase with the bank stock market recovery.
