Given the change in the regulatory environment (the Trump administration being more open to mergers and acquisitions), deal-making activities have increased of late. Last month, 26 bank deals were announced in the United States, marking the highest monthly number of deals since June 2021.
The aggregate deal value in July was $10.83 billion, the largest since December 2021, when $16.46 billion worth of deals were disclosed.
Reasons Behind the Upswing in M&A Activities
To begin with, the recent rebound in the banking sector in terms of M&A activities has been a response to market challenges. The surge in deal-making activities has been driven by pent-up demand, improving bank stock valuations, banks’ desire to gain a competitive edge and expand customer base.
Most importantly, there is renewed optimism for bank consolidations under the Trump administration. The Federal Reserve has proposed easing criteria for banks to be deemed “well managed,” which is an important qualifier for M&A eligibility.
Executives at both large and regional banks are reportedly advancing exploratory talks and interest is growing in potential tie-ups. Faster regulatory approval timelines are an added positive.
These changes have been encouraging larger and regional banks to explore deals, resulting in the rise in M&A activities, following a relatively quiet period in recent years.
A Couple of Notable Deals Announced in July
On July 24, Pinnacle Financial Partners, Inc. PNFP and Synovus Financial Corp. SNV entered an all-stock merger deal worth $8.6 billion, which is expected to close in the first quarter of 2026. The transaction, expected to create the highest-performing regional bank focused on the fastest-growth markets in the Southeast, is also the largest U.S. bank M&A deal announced since 2021.
The deal is expected to be 21% accretive to Pinnacle’s estimated operating EPS in 2027. The transaction is expected to be tax-free to shareholders of both Pinnacle and Synovus.
Kevin Blair, the chairman, CEO and president of Synovus, said, “We are two high-performing institutions with one powerful future. Our belief in the success of this merger is grounded in a decade of strong results and proven execution from both companies, each delivering top-tier earnings and total shareholder returns. Together with Terry and the Pinnacle team, we are primed for continued outperformance, as we are not just combining forces – we are multiplying our impact.”
On July 14, Huntington Bancshares HBAN announced a definitive agreement to acquire Veritex Holdings, Inc. VBTX, a bank holding company headquartered in Dallas, TX. The all-stock transaction, valued at $1.9 billion, is expected to close early in the fourth quarter of 2025. This is the third-largest U.S. bank M&A deal announced so far in 2025.
Per the agreement, Huntington will issue 1.95 shares for each outstanding share of Veritex in a 100% stock transaction. Financially, the transaction is projected to be modestly accretive to Huntington’s EPS and neutral to regulatory capital at closing. The acquisition of Veritex represents a strategic plan by HBAN to accelerate its strong organic growth in Texas by expanding its presence in Dallas/Fort Worth and Houston.
Banks to Benefit From Increased M&As?
While the M&A activity rose drastically last month, it has been relatively low so far in 2025. But as there is more regulatory clarity and an improvement in economic conditions, a meaningful uptick is expected in the second half of the year.
As mergers bring technology upgrades, with banks combining their digital platforms, it may sometimes result in temporary service disruptions or feature changes. However, increased M&As help banks grow faster, diversify risks, improve profitability and enhance shareholder returns.
Bigger balance sheets help banks compete with national players. Also, branch consolidation, shared technology systems and reduced overhead can help banks significantly lower operating costs.
For banks, which depend heavily on investment banking, increased M&A activity will result in a rise in advisory revenues, thereby supporting overall fee income growth.
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Synovus Financial Corp. (SNV): Free Stock Analysis Report Huntington Bancshares Incorporated (HBAN): Free Stock Analysis Report Pinnacle Financial Partners, Inc. (PNFP): Free Stock Analysis Report Veritex Holdings, Inc. (VBTX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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