Amid a dearth of bank deal announcements, Washington Federal Inc. showed large bank M&A is still alive with its $654.4 million acquisition of Luther Burbank Corp.

Largest US bank deals so far this year

U.S. bank M&A has slowed down substantially in 2022, especially among larger banks as the Federal Reserve's M&A approval process under the Biden administration has led to greater regulatory scrutiny and longer closing timelines.

As of Nov. 17, only 146 U.S. bank deals have been announced this year, with 19 of those in the fourth quarter, compared to 205 in all of 2021 and 45 in that year's fourth quarter.

Washington Federal's acquisition of Luther Burbank, which held a deal value of $654.4 million at announcement, is the third-largest U.S. bank deal so far this year, behind Provident Financial Services Inc.'s $1.28 billion acquisition of Lakeland Bancorp Inc. and Toronto-Dominion Bank $13.67 billion deal to buy First Horizon Corp.

Price tag

The third-largest U.S. bank deal announced this year did not come with a hefty price tag.

Among the 10 largest bank deals by deal value announced so far in 2022, Washington Federal's pending purchase of Luther Burbank was the lowest by deal value as a percentage of tangible common equity, at just 97%.

Further, the deal ranks third among the largest U.S. bank deals where deal value was below tangible common equity at announcement since Jan. 1, 2017.

Megadeal slowdown persists

Washington Federal's acquisition of Luther Burbank is only the third U.S. bank megadeal — a transaction with a value of at least $500 million at announcement — so far this year.

That is a sharp decline from 2021, when banks announced a total of 23 megadeals with a total deal value of $67.11 billion across those transactions.

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So far in 2022, total deal value of the three megadeals announced is just $15.60 billion, and TD's purchase of First Horizon accounts for 87.6% of that total.

This year could see the lowest number of U.S. bank megadeal announcements in over a decade.

Four of the last five years each saw more than 10 megadeal announcements. Even 2020, when the COVID-19 pandemic stalled bank M&A, saw six megadeals — twice the number so far in 2022.

The last year in which U.S. banks announced three or fewer megadeals was 2011.