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Insights from the 2026 Bank M&A Survey

The banking sector has shown signs of renewed energy, as highlighted in Bank Director's latest report, the 2026 Bank M&A Survey. Conducted with support from Crowe LLP, the survey reflects a shift in the dynamics of mergers and acquisitions (M&A) within the financial sector.

Increased Interest from Buyers

In recent years, many bank executives have witnessed a growing interest from other financial institutions regarding potential acquisitions. The survey reveals that 37% of the respondents reported that another bank expressed intent to acquire them in 2024 or 2025, a noticeable increase from 27% reported last year. This uptick is indicative of a more active market, with buyers showing readiness to pay higher multiples for desirable targets. An impressive 68% of respondents indicated they would consider offers of 1.5 times tangible book value or more, compared to 54% just a year prior.

Emily McCormick, Vice President of Editorial and Research at Bank Director, noted, "After an anemic three years, deal activity in the banking sector has ticked up, particularly in the third quarter. If sentiments around price are more aligned between buyers and sellers, that hints at more dealmaking over the next few quarters."

Motivations Behind Acquisitions

When asked about their motivations for pursuing acquisitions, 41% of responding executives cited low-cost deposits as a primary factor—an increase from 29% last year. Additionally, geographic expansion and scaling operations to drive technological investments are also top priorities, both attracting 41% and 38% of responses, respectively.

However, potential acquirers face some challenges as well. The survey emphasized that expectations around pricing (74%) and the lack of suitable targets (71%) are considered significant barriers to M&A.

Funding and Profitability Challenges

The survey revealed that 61% of bank leaders regard funding costs as a significant obstacle to maintaining profitability. This finding showcases concerns about attracting and retaining depositors and the value associated with a strong deposit base. Patrick Vernon, a partner at Crowe, noted the industry's common inquiries: "How do we attract and retain depositors?" and "What's the value in a strong deposit book?" He went on to indicate that pursuing M&A strategies might be essential for banks looking to bolster their deposit bases in the current climate.

Boardroom Engagement

The survey also highlighted the frequency of M&A discussions within boardrooms. 40% of respondents mentioned that their boards review M&A strategies quarterly, while 28% do so annually. These discussions often center around overall strategy alignment (73%), identifying potential targets (65%), and examining M&A trends (58%).

In responses to strategies for improving sale prices, 44% indicated that enhancing fee-generating businesses could contribute positively, 29% suggested reducing reliance on high-cost, non-core deposits, and 19% noted the possibility of renegotiating key vendor contracts.

Future Growth Projections

Regarding organic growth expectations, respondents anticipate that 67% of commercial real estate and 65% of commercial and industrial lending will drive their expansion in 2026. Moreover, 38% foresee growth stemming from fee-driven services like wealth management and treasury management. Interestingly, despite the increasing interest across numerous financial services, only 21% of respondents expressed willingness to explore cryptocurrency or digital asset custody services, with 44% admitting it hasn’t been a topic of discussion yet.

Finally, regarding economic outlooks, 57% of executives expect the U.S. economy to grow moderately through the end of 2026, while 15% brace for possible recessive conditions.

In summary, the 2026 Bank M&A Survey provides a comprehensive look at the shifting landscape of the banking sector, revealing increased buyer interest, improved pricing alignment between buyers and sellers, and evolving motivations for M&A activity. To read the full report and gain insights into the banking industry's future, please visit BankDirector.com.