One out of four banking leaders expect to merge within the year as deal values climb
Despite inconsistent predictions and a slow start to the year, banking M&A is starting to look up in 2025, according to deal data and a new survey of executives at banks, fintechs and credit unions. The survey from American Banker finds that 25% of banking leaders expect to merge with another financial institution within the year. As in years past, M&A continues to deliver resources for innovation and scale for growth-focused financial institutions. “Banks are pursuing M&A deals to expand their market share, improve client segmentation and enhance deposit growth,” according to Matthew Markham, a partner at Capco, interviewed in American Banker.
The data on M&A deals is bearing out that renewed enthusiasm among banking leaders. “Thirty-four U.S. bank deals worth a combined $1.61 billion were announced in the first quarter this year, marking the highest first-quarter total by aggregate deal value since 2021,” according to S&P Global Intelligence. Even as overall banking M&A volume came in lower in 2024, deal value was up year over year, a trend that carried into Q1 of 2025 despite regulatory uncertainty. “Bank M&A activity in the first quarter was far from the wave that many expected, but deals are closing faster,” according to Brendan Nosal, an analyst for the Hovde Group.
“It has been a bit of a roller coaster over recent years,” says Nick Mentel, Adrenaline’s Managing Director of Insights & Analytics. After an understandably slow 2020, there was a rash of 435 M&A deals in 2021, including some really large ones. But since then, none of the three full years that followed have come all that close to matching 2021 volumes. Despite macro-economic challenges, Mentel says there is reason for optimism. “It wouldn’t surprise me if deal activity is relatively robust the rest of the year. The rationale for a significant bounceback in M&A activity in banking persists, owing largely to healthy market fundamentals, strategic benefits, and well-capitalized balance sheets.”
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