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Scale Versus Consistency
When banks — particularly regional banks — announce an acquisition, scale tends to come up as a driver for both buyers and sellers.
“… scale makes a difference,” said Comerica CEO and Chairman Curtis Farmer, explaining to analysts in October 2025 why the Dallas-based bank would sell to Fifth Third Bancorp in Cincinnati. That transaction closed earlier this month, creating a $294 billion institution. “As we have faced increased cost in terms of technology, in terms of marketing, in terms of product development, in terms of regulatory expense, it has become increasingly challenging for us.”
Many community banks agree: 38% of bank executives and board members participating in Bank Director’s 2026 Bank M&A Survey cited scale to drive technology and other investments as one of the two primary factors that would make M&A an important part of their growth strategy.
The markets reward scale, said Keefe, Bruyette & Woods CEO Tom Michaud recently at Bank Director’s Acquire or Be Acquired Conference. “Scale still works. Scale isn't necessarily the goal, but scale seems to work,” he said. Scale tends to drive better profitability in terms of return on tangible common equity, and that drives a higher valuation.
But there’s one characteristic that trumps scale: consistent profitability. Michaud called out $15 billion First Financial Bankshares in Abilene, Texas, as an example, which tends to trade at more than three times tangible book value. Indeed, the five highest valued bank stocks based on price to tangible book were under $10 billion in assets, he said. These institutions are “consistent, and they've got management teams who've been there for a while with a consistent strategy,” said Michaud, “I think that's what investors like.”
The strongest performers aren’t necessarily the largest banks. We’ve seen that at Bank Director year after year in our annual RankingBanking study, which measures the top 300 publicly traded banks by financial performance. In last year’s report, most of the top 25 banks were below $10 billion in assets. Just one — East West Bancorp in Pasadena, California — exceeded $50 billion.
Execution matters more than scale. Stephen Steinour, CEO and chairman of Huntington Bancshares, mentioned the pursuit of scale as a driver behind the Columbus, Ohio-based bank’s recent deals for Bank Director magazine’s first quarter issue. But he wasn’t solely focused on getting bigger.
“We want to be better,” he said.
• Emily McCormick, vice president of editorial & research for Bank Director
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