If 2025 was about securing favorable conditions to get bank deals done, 2026 is likely to see a flood of activity while the window of opportunity is open.

Further industry consolidation this year is expected to result in a banking landscape that looks like a barbell, analysts said, as midtier and regional banks get bigger through acquisitions and move to the larger side, while the country’s many smaller banks – particularly under $1 billion in assets – occupy the other end. 

With 181 deals announced last year, bank M&A announcements in 2025 reached their highest level since 2021, according to S&P Global Market Intelligence. The second half of 2025 saw a surge in deal announcements, with 105, compared to 63 in the latter half of 2024.

The probability of a deal gaining bank regulator approval has gone up materially, making M&A more attractive, said Brian Graham, co-founder and partner at financial services advisory and investing firm Klaros Group.

“More important than that, I think, is the time frame to get a decision has gone down dramatically,” Graham said. Waiting three to four months, rather than 18 months to two years, is “a huge change in the risk that a buyer sees entering into a merger transaction,” he said. 

Faster timelines, supervisory rating framework revisions and momentum behind raising asset thresholds “point to an even more constructive bank M&A environment in '26 and beyond,” UBS analyst Nicholas Holowko wrote in a December note. 

Bank stock prices have risen, and interest rates are expected to drop further this year. Meanwhile, succession issues and mounting technology costs continue to squeeze smaller lenders, while bigger players crave greater scale. 

Plus, competitive threats to the traditional banking model are “starting to bite,” Graham said. The number of new accounts being opened at the Chimes of the world is impactful, and “that pressure is starting to come to bear in ways that matter,” he said.

The number of bank deals could double what the sector saw in 2025, given pent-up pressure from slower activity early in the decade, analysts said. And banks are likely to act sooner than later, in case 2026 midterm elections – or the 2028 vote – send the political pendulum in another direction, analysts said.

States with lots of banks, such as Texas, Illinois, Ohio, Minnesota and Pennsylvania, are likely to see continued consolidation. Regional plays will continue, particularly among $10 billion- to $100 billion-asset banks, analysts said. 

Those banks and even bigger lenders see a green light to pursue acquisitions they didn’t during the previous administration.

Even Wells Fargo CEO Charlie Scharf, at a Goldman Sachs conference in December, noted the bank feels “no pressure” to do an acquisition, but that “doesn’t mean that we’re not thinking about M&A,” given regulators’ openness to sizable deals. 

Buyer, seller identity

For deal activity to continue this year, analysts expect more banks that have been on the sidelines will become buyers.  

“When we talk to the bigger regional banks,” there’s “that vibe of, everyone is a potential buyer,” said Tom Hayes, managing director and head of depositories investment banking at D.A. Davidson. As those regionals get bigger, though, they’re less interested in acquiring tiny banks.

Consolidation has altered the buyer landscape, removing some banks that had been repeat acquirers, such as Cadence Bank, and leaving smaller lenders re-evaluating. 

“As upstream asset-size banks are consolidating, downstream banks are saying, ‘Hey, here was my likely buyer that I used to think would be interested in me, and they've now doubled in size over the last few years. Don’t know if they're still going to be interested in me. So maybe I should do something sooner than later, before my buyer universe disappears or changes drastically,’” said Kirk Hovde, managing principal and head of investment banking at Hovde Group.

In particular, the buyer pool for sub-$1 billion-asset banks is likely to be affected by consolidation. 

And if there aren’t enough potential buyers of those banks, it may lead more small banks to merge, Hayes said. Credit unions have also become more frequent small-bank buyers in the past several years, and that’s expected to continue.

Faster regulatory approval helps bring more buyers into the market, as does regulatory openness to nonbank entities buying lenders. Fintechs and investor groups are hunting for small-bank acquisition targets, said Joe Silvia, a partner at law firm Duane Morris.

Of course, the buyer-seller landscape is always shifting. 

“I’ve had conversations with banks that say, we’re absolutely a buyer, and then a couple months later, they’re on the sell side of a deal,” said Patrick Hanchey, a partner at law firm Alston & Bird. “Some bankers are surprised by opportunities that present themselves that end up making a lot of sense, even though it wasn't the strategy moving forward. That's certainly happening on a pretty regular basis.”

Prompting, inhibiting M&A

More banks may turn into sellers as they consider their bottom lines, technology standing and the future.

“We've seen a lot of advancement … especially on the fintech and digital asset side of things,” Silvia said of the past year. “There's going to be smaller institutions that see that trend continuing and really have to look hard at whether or not they want to engage in that, or just look at potentially selling.”

The possibilities with stablecoins, for example, have prompted more deal discussion, Hanchey said.

Additionally, asset threshold adjustments floated by regulators and lawmakers may have more banks considering mergers of equals, if they can realize value and efficiencies by doubling in size without stepping into a new regulatory class, Hanchey said.

Activist investors also may influence future buyers and sellers. Vocal investor HoldCo Asset Management last year prodded Comerica to sell itself – which it did – and urged KeyBank not to make an acquisition. 

HoldCo co-founder Vik Ghei said the firm wants to see banks employ more rigor in judging acquisitions. “A management team will have to be prepared to defend an acquisition and that alone, in our opinion, is probably going to dramatically lessen the number of acquisitions that otherwise would have happened,” he said.

Such cases aren’t common in the industry, analysts noted. But investor pressure could make buyers “a little hesitant to pull the trigger” for fear of being “the next target of these activists,” Hayes said.

An extended M&A spurt may leave the industry with fewer banks, but analysts and executives ultimately see benefits to a bigger pool of larger lenders. “We’ve got four humongous banks. I’d feel better if we had eight,” Graham said.

A more constructive M&A environment boosts industry capability in a “healthy” way, said Marianne Lake, CEO of JPMorgan Chase’s consumer and community banking segment.

“As more and more companies are either able to complete their capabilities, complete their product set, or gain more scale and more capacity to invest, it will breed high levels of competition,” Lake said at the Goldman conference in December.