M&A Slumps to Low Point Amid Sector Turmoil

Quarterly banking sector merger and acquisition activity is on track to reach its lowest level in three years, according to data from S&P Global Market Intelligence.

Just four deals were announced in May, the data showed, bringing the second-quarter total to just 12 — the lowest since the same period in 2020, at the start of the nationwide lockdowns in response to the pandemic.

So far in 2023, 32 M&A deals involving US banks have been announced up to the end of May, with the aggregate disclosed deal value totalling just over $580 million. This compared with 66 deals announced in the first five months of 2022, with an aggregate value of almost $3 billion.

Federal regulators introduced more stringent M&A reviews in the wake of the banking collapses in March, while questions over balance sheet strength through a rising interest rate environment have spooked some investors.

The biggest deal so far this year is First Mid Bancshares’ planned $90.3 million acquisition of Wisconsin-based Blackhawk Bancorp, which was first announced on March 21. Illinois-based First Mid said in March that it expected to close the deal in the second half of this year, adding $1.3 billion in assets to its balance sheet.

Late last week, First Mid announced that its insurance subsidiary, First Mid Insurance Group, has bought Purdum-Gray-Ingledue-Beck (PGIB) Insurance and Investments Agency, growing the company’s market presence in the healthcare and hospitality sectors in particular.

Another of 2023’s biggest deals so far involved Massachusetts-based 1831 Bancorp — parent to Dedham Institution for Savings — acquiring South Shore Bancorp. The deal will add more than $2 billion in assets to 1831’s balance sheet.

S&P Global Market Intelligence’s data does not include JP Morgan Chase’s purchase of First Republic Bank, nor does it include the purchases of the former Signature Bank and Silicon Valley Bank from the Federal Deposit Insurance Corporation.