Bank M&A Review and Outlook Amid Continued Volatility By Wyatt Jenkins, CPA, Director, Forvis Mazars Capital Advisors LLC While transaction activity picked up somewhat in 2024, bank mergers and acquisitions (M&A) posted another quiet year in 2024, with only 124 announced whole bank and thrift transactions, according to data from S&P Global Market Intelligence. This total is just above the pandemic low of 112 transactions in 2020. However, this total for 2024 was likely held lower than historical norms by unrealized losses and election-year politics. The outcome of the U.S. presidential and congressional elections is likely to provide some lift to bank M&A activity in 2025. However, economic challenges, driven by substantial and sustained political uncertainty, could quickly put a damper on hopes for an active year in bank M&A. Pricing for whole bank and thrift transactions remained relatively stable in 2024, with an average price to tangible book value (P/TBV) of 126% compared to 128% in 2023. However, that continues to be below the average P/TBV levels seen over the past 10 years. Based on the latest data available as of this writing, The Conference Board’s Leading Economic Index® decreased by 0.7% in March 2025 to 100.5, after decreasing by 0.2% in February. This continued decline has led The Conference Board to expect annualized real gross domestic product (GDP) growth to slow to approximately 1.6% as tariff impacts set in, manufacturing new orders retreat, and a pullback in consumer sentiment and spending weighs on the economy. With the Federal Reserve working to assess the impact of fast-changing trade and tariff policies, Fed officials appear to be taking a wait-and-see approach to interest rate reductions and signaled at their March meeting that they may only cut interest rates twice this year. Stock prices for banks finally started to see some recovery through the end of March 2025. The Dow Jones U.S. Banks Index (DJUSBK) was up 15.54% at 638.67 for the 12-month period ending on March 31, 2025, while the KBW Nasdaq Bank Index (BKX) was up 16.85% at 122.52 and the S&P Regional Banking ETF (KRE) was up 14.17% at 56.85 during the same period. However, tariff announcements by the federal government in early April drove sharp drops in bank stocks and the broader stock market before the market recovered, to some extent, as tariffs were eased or paused and many countries worked to negotiate trade agreements with the United States. However, bank stocks were still down from the end of March, with DJUSBK down 6.98%, BKX down 8.28% and KRE down 7.88% from March 31, 2025, to April 22, 2025. These challenges have continued to subdue the bank M&A market somewhat against historical norms for transaction volume. However, transaction activity through March 2025 is running ahead of the historically low levels of transactions seen through March 2024. Year-to-date through March 2025, a total of 34 transactions were announced nationwide, which is higher than the 28 transactions announced through March 2024. Based on transactions with pricing data available, P/TBV has averaged 152% through March 2025. From a regional perspective, Midwest transactions totaled 46 in 2024 compared to 39 in 2023, with an average P/TBV of 142% compared to 130% in 2023. Year-to-date through March 2025 has seen a total of 13 announced transactions in the Midwest, which is ahead of the nine transactions announced through March 2024. There was only one transaction with pricing data in the Midwest through March 2025, which is Old Second Bancorp’s acquisition of Bancorp Financial at 131% P/TBV. In Kansas, there were six transactions in 2024, compared with only four transactions in 2023. There was only one transaction with disclosed pricing data in Kansas for 2024, which was First Busey Corporation’s acquisition of CrossFirst Bankshares Inc., 30
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