The commencement of consolidation through mergers and acquisitions in the banking sector has arrived, labeled as the 'joiner' phase.
In the world of banking, the current M&A environment is said to be more "conducive" by Columbia Banking System's CEO, Clint Stein, compared to the period during Columbia's $5.2 billion merger with Umpqua Bank. This shift can be attributed to the regulatory approach under the second Trump administration, which emphasizes a more efficient, expedited, and less restrictive review process for bank mergers and acquisitions.
Under the Trump administration, the FDIC and OCC have rescinded the Biden-era 2024 policy on bank merger reviews and reinstated older, pre-2024 regulatory policies from 1998. This change has restored an expedited process for qualifying M&A applications, allowing a 15-day pathway for applications to be deemed approved. The OCC has also issued an interim final rule enabling automatic expedited processing for specified eligible M&A.
Recent large bank deals under the Trump administration have been betting on shorter regulatory review timelines. For instance, the Pinnacle-Synovus merger is expected to undergo an eight-month review, compared to 14 months for the Capital One-Discover deal approved during the Biden administration. However, careful scrutiny is still given, especially on larger or more complex deals.
Notable deals include Columbia Banking System's $2 billion deal to buy Pacific Premier Bank, expected to close in the second half of this year with a shorter approval timeline compared to the Umpqua deal. Eastern Bank and HarborOne announced a $490 million merger, and Old National's $1.4 billion acquisition of Bremer Bank is expected to close on May 1, a shorter timeline compared to the initial "mid-2025" time frame given.
Smaller deals are also on the rise. St. Louis-based Enterprise Bank & Trust will acquire 10 locations in Arizona and two in Kansas from First Interstate Bank. Busey Bank's acquisition of CrossFirst closed in six months, and Atlantic Union Bank's $1.6 billion acquisition of Sandy Spring wrapped in just over five months.
Cadence Bank bought Industry Bancshares for between $20 million and $60 million in cash, and M&A activity is ramping up, particularly among banks holding $25 billion or more in assets.
Deals with a cash component may prove an easier sell if bank valuations indeed "grease the skids" of M&A, as Olsen Palmer's Christopher Olsen stated. Federal Deposit Insurance Corp. Acting Chair Travis Hill has prioritized more timely bank merger approvals.
Despite smoother and faster approval processes, there is still careful scrutiny, especially on larger or more complex deals, which may affect timelines depending on public comments and market conditions. The Capital One-Discover deal received approval from the Federal Reserve and Office of the Comptroller of the Currency after a 14-month wait, likely due to its size and potential impact.
In contrast, Columbia's Umpqua deal saw an 11-month Justice Department investigation. Clint Stein, CEO of Columbia Banking System, mentioned a "seismic shift in the operating or rate environment" during the Umpqua integration, but characterized today's M&A environment as more "conducive". According to Christopher Olsen, managing partner and co-founder of investment-banking firm Olsen Palmer, smaller banks have felt consolidation pressure for several years, and Trump's reelection could accelerate this trend.
In summary, the regulatory approach under the second Trump administration has resulted in a more efficient, expedited, and less restrictive review process for bank mergers and acquisitions compared to the preceding Biden administration, which had imposed longer and more complex review requirements. This shift has contributed to a surge in M&A activity in the banking sector.
- The surge in M&A activity within the banking industry under the second Trump administration can be credited to the efficient, expedited, and less restrictive review process for bank mergers and acquisitions, compared to the preceding Biden administration.
- The re-established regulatory policies from 1998, such as the 15-day pathway for qualifying M&A applications to be deemed approved, have allowed for smoother deals between financial institutions, as was evident in the Pinnacle-Synovus merger and Old National's acquisition of Bremer Bank.
