Banks Regain Their Deal-Making Nerve as M&A Momentum Builds
After several years of uncertainty, the pieces appear to be falling into place for a decisive rebound in bank mergers and acquisitions. As Michael M. Bell, M&A attorney with Honigman LLP, puts it, “All the factors that are out of buyers’ and sellers’ control seem to be aligned at the moment.” He expects “a very strong finish to 2025,” adding that 2026 “will remain strong as far as market activity goes.”
That optimism reflects a growing sense across the industry that the macro conditions — stabilizing rates, improved regulatory tone, and renewed investor confidence — are finally cooperating. As reported in American Banker, deal volume began trending upward in mid-2025 as buyers regained confidence and sellers recalibrated valuations. The climate, in short, is warming.
Drivers of Bank M&A: Scale, Efficiency, and Digital Viability
Andrew Liesch, Head of Bank Strategy at Travillian, sees a different but equally powerful set of forces driving the M&A revival: efficiency and leadership continuity. “With margins compressed and operating costs rising — especially expenses required to stay competitive in technology — scale is becoming imperative,” he explains. “M&A is the quickest way to add that scale.”
Liesch also points to an under-discussed driver: aging leadership. “Many banks are faced with aging management teams and boards, leaving a wide gap in succession planning,” he notes. For some institutions, merging “is oftentimes the only solution” to ensure long-term viability.
This wave of M&A, then, isn’t merely opportunistic; it’s transformative. Many smaller and mid-tier banks now view consolidation as the surest way to fund digital transformation, comply with evolving regulatory expectations, and preserve leadership continuity.
M&A Risks for Community Banking
Yet not everyone welcomes the trend. Brad Bolton, President and CEO of Community Spirit Bank in Red Bay, Ala., believes the nation’s financial fabric depends on keeping community institutions independent. “For the sake of Main Street, I hope the trend slows down,” he says.
Bolton worries that the opposite will occur. “A regulatory regime that is more open to approving larger M&A deals, as well as Congress and many states’ failure to address credit unions buying community banks, are both warning signs that M&A will likely remain active into 2026.”
He encourages community bankers to explore alternatives before selling. “Holding companies and ESOP/KSOP plans are important tools for bankers to provide shareholder liquidity to owners who want an exit plan,” he says. Beyond ownership structures, Bolton warns of the civic cost of consolidation: “There is a strong correlation between increased regulation and increased consolidation of the industry. Now, with regulators seeking ways to help community banks flourish, it’s a great time for executives to consider the damage to their communities if their bank no longer exists.”
For Bolton, preserving local ownership equals protecting local prosperity. “We need as many diverse community bank franchises across this country as feasibly possible because we fuel Main Street,” he insists.
How Mergers Create a Recruiting Crisis Paradox
Brian Love, Head of Banking and Fintech at Travillian, adds another layer to the M&A discussion: workforce impact. “Industry pundits anticipate M&A activity to blaze its way back in 2025 and 2026,” he says. “In doing so, the candidate market gets saturated.”
As mergers close and overlapping roles disappear, waves of displaced professionals will enter the job market. At first glance, that might seem beneficial: more talent, more choice. But Love cautions that this perceived abundance can obscure challenges. “There will be a feeding frenzy for the top-tier candidates,” he explains, “and banks will wind up settling for B-level talent.” Meanwhile, “A-listers will opt for better courters with more negotiating power,” leading even well-positioned institutions to struggle for the talent they want most.
He also foresees challenges in recruiting emerging leaders. “Executive-level successors and production team lift-outs will become exponentially more difficult,” Love warns, “because more sharks are circling the chum.”
For that reason, he advises banks to act swiftly, before consolidation peaks. “The tidal wave of mergers and acquisitions is still brewing,” he says. “The calm before the storm is the best time to buy umbrellas.”
Defining Your Institution’s Relevance in the New M&A Cycle
Taken together, these expert views paint a two-track landscape heading into 2026. On one track, acquisitive banks—often mid-sized regionals—will pursue scale, digital capability, and leadership renewal through strategic combinations. On the other, mission-driven community banks will double down on local continuity, emphasizing independence as both a cultural and economic differentiator.
Either way, the year ahead promises movement. As Bell noted, the external forces finally seem aligned. Liesch’s efficiency argument and Bolton’s localism offer competing — yet complementary — perspectives on healthy consolidation. And as Love reminds, every merger carries human consequences that will shape the next generation of banking leadership.
For executives preparing their 2026 strategy, one message stands out: The M&A cycle is no longer hypothetical; it has arrived. Whether an institution chooses to acquire, be acquired, or stay independent, today’s decisions will define its relevance in the decade ahead.
