The ‘joiner’ era of bank M&A has begun

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For months, the Capital One-Discover deal had been spotlighted as the bellwether for how bank mergers and acquisitions could go under a second Trump administration.

Not just the will-they-or-won’t-they (as in, would regulators sign off on the combination?), but how long will transactions sit in evaluation? Which potential stumbling blocks would be eased or de-emphasized?

In the two weeks since the deal received green lights from the Federal Reserve and Office of the Comptroller of the Currency, it’s fair to say bank M&A is off to the races.

Perhaps the first clue that the bank-mashup floodgates had opened came last Wednesday, when Columbia Banking System said it would buy Pacific Premier Bank in an all-stock $2 billion deal that would cement the Pacific Northwest juggernaut deeper into Southern California.

But the dominoes continued. The next day, Boston-based Eastern Bank announced it would merge with in-state competitor HarborOne in a $490 million cash-and-stock deal. A day later, Cadence Bank said it would buy Industry Bancshares, the beleaguered holding company that owns six community banks in Texas, for between $20 million and $60 million in cash.

And that’s just banks that hold $25 billion or more in assets. Smaller deals in Pennsylvania and Tennessee, for example, have followed – as has a partial-bank transaction in which St. Louis-based Enterprise Bank & Trust will acquire 10 locations in Arizona and two in Kansas from Montana-based First Interstate Bank.

That M&A is ramping up shouldn’t be a surprise. Christopher Olsen, managing partner and co-founder of investment-banking firm Olsen Palmer, told Banking Dive last month that smaller banks, in particular, have felt consolidation pressure for several years, adding that Trump’s reelection could act as “sort of the powder keg” to drive that trend. 

Some of the participants, on the other hand, may be a surprise. It would be understandable if Columbia had been trigger-shy on acquisitions. Its $5.2 billion merger with Umpqua Bank, announced in October 2021, took more than 16 months to close – and did so less than two weeks before Silvergate, Signature and Silicon Valley Bank failed.

Columbia CEO Clint Stein, in a call last week addressing the Pacific Premier deal, pointed to a “seismic shift in the operating or rate environment” during the Umpqua integration, according to American Banker. Stein, however, characterized today’s M&A environment as more “conducive” by comparison.