5 biggest bank M&A deals in 2023

December 27, 2023 12:00 PM

Bank merger-and-acquisition momentum proved elusive throughout 2023 amid increased regulatory scrutiny, spiking interest rates and recession fears. Market volatility also pressured bank stocks and, by extension, buyers' ability to use their shares as currency to pay for deals.

The 91 bank mergers announced through Nov. 30 had an aggregate deal value of almost $4 billion, down from 144 deals valued at just over $8.2 billion during the same period in 2022, according to S&P Global Market Intelligence.

There were about 160 deals announced in all of 2022, which was down from roughly 200 transactions announced in 2021.

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Notwithstanding the overall trend this year, there have been recent signs of momentum. There were slightly more deals announced between July through November — 46 — than in the first six months of the year. What's more, in the fourth quarter, the biggest deal of 2023 — Banc of California's acquisition of PacWest Bancorp — was finalized as planned. All five of 2023's largest combinations were announced in the second half of the year.

The following is a snapshot of 2023's biggest deals by price, ranked in ascending order.

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Old National Bancorp-CapStar Financial Holdings

Old National Bancorp said in October that it had struck a deal to acquire the $3 billion-asset CapStar Financial Holdings in Nashville, Tennessee, in an-all stock deal valued at $344.4 million.

The acquisition, expected to close in the second quarter of 2024, would give the $49 billion-asset Old National $2.3 billion of loans and $2.8 billion of deposits. It would gain a top-10 deposit market share presence in the Nashville metropolitan area. It would also pick up CapStar's footprint in Asheville, North Carolina.

Old National entered the Tennessee market in 2022, when it introduced a Nashville-based high-net-worth wealth management operation. Shortly after that, the Evansville, Indiana-based Old National added a commercial banking team in Tennessee's largest market.

The combination with CapStar is "a natural extension of our growth strategy," Old National CEO Jim Ryan said in announcing the deal. "By establishing a full-service banking presence in Nashville and several other strong Tennessee and North Carolina communities, we can more fully serve our existing Nashville-area clients while also introducing our client- and community-focused brand of banking to the surrounding region."

Old National, which has been expanding in the Southeast and the Midwest, has closed 13 acquisitions since 2011. It most recently acquired the $21 billion-asset First Midwest Bancorp in Chicago last year for $2.5 billion.

Burke & Herbert Financial-Summit Financial Group

Alexandria, Virginia-based Burke & Herbert Financial in August announced the first deal in its history, agreeing to pay $371.5 million in stock for the Summit Financial Group in Moorefield, West Virginia.

Billed as a merger of equals, Summit investors would own about half the pro forma company, but Burke & Herbert would be the surviving corporate identity, and the headquarters would be in Alexandria, Burke & Herbert's base since 1852. The deal is expected to close in the first quarter of 2024.

Burke & Herbert Chairman and CEO David Boyle would retain his titles and lead the combined company. Charlie Maddy, Summit's president and CEO, would serve as president. The 16-member board would include eight directors from each company.

The $3.6 billion-asset Burke & Herbert has pursued rapid organic growth in recent years. But it had never previously acquired another bank. The transaction would create an $8.1 billion-asset regional bank spread across five states.

Maddy trumpeted the combination when co-announcing the deal. "This alliance doesn't just extend our influence; it strategically positions us for future growth," he said. "I am unwavering in my belief that this partnership will elevate us to heights neither of our organizations could have reached on their own."

Atlantic Union Bankshares-American National Bankshares

Richmond, Virginia-based Atlantic Union Bankshares announced in July its $417 million, all-stock deal for American National Bankshares in Danville, Virginia, to drive further growth in neighboring North Carolina.

"It's something we've long sought," John Asbury, Atlantic Union's president and CEO, said on a conference call with analysts at the time. "The critical mass this achieves creates something we can build on for years to come."

The largest community bank headquartered in Virginia, the $21 billion-asset Atlantic Union has four branches in eastern North Carolina, along with a loan production office in the state's largest city, Charlotte. Acquiring the $3.1 billion-asset American National would give Atlantic Union seven additional branches in the Piedmont Triad region.

The acquisition would also bolster Atlantic Union's Virginia presence. The pro forma company would hold $17.8 billion of deposits in Virginia, amounting to about 8% of the state's $236 billion deposit market. Its deposits in North Carolina would total $1.1 billion.

Atlantic Union anticipates finalizing the deal in the first quarter of 2024.

Eastern Bankshares-Cambridge Bancorp

Eastern Bankshares in Boston said in September that it would acquire Cambridge Bancorp, the Massachusetts-based parent company of Cambridge Trust, in an all-stock transaction valued at about $528 million. The deal is slated to close early in 2024.

The $5.5 billion-asset Cambridge Trust has about $4 billion of total loans, $4.4 billion of deposits and $4.4 billion of client assets under management and administration. The combined company is expected to have approximately $27 billion of total assets, $18 billion of loans, $22.6 billion of deposits and $7.6 billion of assets under management and administration.

"As we set our sights on the future, the enhanced capabilities and financial strength created by this merger will allow us to further position Eastern as the region's local financial partner of choice, delivering enhanced value for our customers and shareholders, greater support for our communities, and increased opportunities for our colleagues," Bob Rivers, chairman and CEO of Eastern, said in a press release.

Upon closing, Denis Sheahan, chairman and CEO of Cambridge, would become the CEO of the combined company and join its board. Eastern President Quincy Miller would be promoted to vice chair, president and chief operating officer. Both Sheahan and Miller would report directly to Rivers, who would serve as executive chair and board chair.

Banc of California-PacWest Bancorp

Banc of California in Los Angeles acquired PacWest Bancorp on Dec. 1 in an all-stock transaction that was valued at $1 billion when announced in July. The combined company has about $36 billion of assets and more than 70 branches in California, along with offices in North Carolina and Colorado.

PacWest was among the Western banks hurt by deposit runoff and market volatility in the wake of Silicon Valley Bank's failure in March. PacWest reported losing almost $6 billion of deposits during the first quarter.

The merger was a way to "capitalize on the opportunities created for stronger financial institutions in the wake of the recent banking industry turmoil," Banc of California CEO Jared Wolff said when the deal was announced in July. Wolff leads the combined bank following the deal's closing in late November.

The timely closing was notable both because of the deal's size and because other large transactions have been delayed or nixed over the past year. TD Bank and First Horizon called off their long-delayed merger earlier this year due to problems securing regulatory approvals.