Bank Mergers Just Hit a 7-Year High. Here Are the Regional Banks Most Likely to Make a Deal.
Key Points
Merger-and-acquisitions activity among regional banks hit a seven-year high during the first half of 2026 alone.
Some of the larger, more acquisitive regional banks could continue to pursue mergers.
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Merger mania continues unabated among regional banks. Currently at its highest level in seven years, merger and acquisition (M&A) transaction volume among banks reached $15.1 billion in the first six months of this year.
That's not even including several deals first announced in 2025 that have so far closed this year, including deals that overnight have significantly bulked up national presence for regional banks including PNC Financial Services (NYSE: PNC), Fifth Third (NYSE: FITB), Huntington Bancshares (NASDAQ: HBAN) and Pinnacle Financial Partners (NYSE: PNFP). As the trend continues, what are the top regional bank takeover targets? Let's dive in and find out.
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This year's top buyers could pursue more takeovers
The aforementioned regional banks are front and center in some of the highest-profile bank M&A deals of early 2026. PNC, formerly East Coast-focused, completed its merger with FirstBank in January, expanding its presence in Western states such as Arizona and Colorado. In January, Pinnacle closed on its merger with Synovus, creating a new regional banking powerhouse in the Southeastern U.S.
In February, Fifth Third completed its merger with Comerica. Besides bolstering its Midwest presence, this transaction also increased Fifth Third's exposure to Sunbelt regions such as Texas and California. Also at the start of 2026, Huntington Bancshares completed its acquisition of Texas-based Cadence Bank.
After digesting such large deals, many of these banks could seek more deals, and not only for geographic diversification. These transactions also provide regional banks with the opportunity to quickly increase their deposit bases. Mergers between regional banks can also create favorable cost and growth synergies. For the larger, more profitable regional banks, these deals can often be immediately accretive, thanks to relatively high stock market valuations. A favorable regulatory climate, which could end after this year's midterm elections, is another factor driving this latest bank consolidation wave.
PNC and Fifth Third, for example, each trade at a forward price-to-earnings ratio in the mid-teens. Acquiring banks with lower valuations in all-stock transactions can immediately boost earnings per share (EPS), even before implementing cost reduction measures.
Top targets among regional banks
Although Fifth Third and PNC could continue as top buyers, what are some likely targets among regional bank stocks? Banks that have come under shareholder activist pressure from HoldCo Asset Management, including KeyCorp (NYSE: KEY) and Eastern Bankshares (NASDAQ: EBC) could be top targets for a regional bank merger deal.
KeyCorp and Eastern's presence in the Midwest and Northeast, respectively, could make them prime acquisition candidates for banks looking to expand in either region. Even as management at both banks was successful in keeping their mutual activist at bay, shareholder dissatisfaction could pressure their respective managements to pursue strategic alternatives, including a sale or merger.
Large banks that haven't experienced high-profile activist campaigns but are trading at low valuations could also be prime targets for the most acquisitive regional banks. Some names that spring to mind include First Horizon (NYSE: FHN), FNB Corporation (NYSE: FNB), and Webster Financial (NYSE: WBS). Each of these regional banks trades at a lower forward valuation than the aforementioned richly priced serial acquirers.
However, I wouldn't buy any of these financial stocks solely on takeover potential. I would approach each one under the assumption that they will stay independent, by assessing other factors, such as deposit growth, earnings growth, and any potential acquisition efforts each one may have planned. I also wouldn't rule out buying some of the acquirer stocks, especially Huntington Bancshares. It's already trading at a discount, and success in integrating its recent acquisitions could result not just in better-than-expected earnings growth but also in improved sentiment about the stock.
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Thomas Niel has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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