January 25, 2025 / VOLUME NO. 350

Uncertainty and Volatility


It seems every year the experts predict an increase in bank M&A. And this year is no exception. 


When I reached Ted Rosinus this week, an investment banker and managing director with Stephens, he was preparing to jump on a plane for Bank Director’s annual Acquire or Be Acquired Conference in Phoenix, which starts tomorrow. 


Perhaps it’s no surprise that Rosinus expects M&A will pick up this year. Consultants and advisors are predicting more activity in part because the obstacle course just got a bit easier. Bank Director’s 2025 Bank M&A Survey also found bank leaders more favorable to dealmaking. 


There are a multitude of reasons why that might be so. With interest rates coming down, low-interest loans maturing, improved valuations of securities portfolios and stock prices, buyers and sellers have more reason to come to the table. Better stock valuations give buyers currency to make an offer. Plus, new presidential appointees may facilitate deals and make regulation easier for banks. Adding to that, Rosinus mentioned the dearth of CEO candidates to replace retiring CEOs, creating the need for more deals.


The year 2024 had 125 announced deals, up from a skimpy 98 in 2023, but still lower than 2021 or 2022, according to S&P Global Market Intelligence. “Total transactions in the sector regularly topped 240 in the pre-pandemic years,” the research firm reported. Even if you go by the standard metric that 3% of the industry consolidates every year, 2024 was a down year. Higher interest rates, worries about credit losses, the regulatory environment and unrealized losses in securities portfolios all contributed to low levels of deal activity over the last two years. 


While the environment looks easier, it’s not a slam dunk. Credit problems could surface at banks. An inflationary environment could force the Federal Reserve to raise rates. Yields on the 10-year Treasury have been volatile and rising since December, most recently hitting 4.6% mid-week. 


It may indeed be a blockbuster year for M&A. But the banking industry and the economy will have to see stability for that to happen. “Uncertainty and volatility are the big undoers of M&A,” Rosinus says. 


• Naomi Snyder, editor-in-chief for Bank Director

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