As the dust settled on the late-2024 surge in bank mergers and acquisitions, one question lingered: was it a fleeting anomaly or the beginning of something more?
In this episode of Travillian Next, Michael Perito, Head of Bank Strategy at Travillian, brings together two seasoned investment bankers, Josh Nolan of D.A. Davidson and Jason Hach of Piper Sandler, for a sharp and grounded discussion on what’s fueling (and still hindering) depository M&A in 2025.
With humor, candor, and years of experience, they unpack the realities behind the optimism, the regulatory friction, and why “fortitude” might be the word of the year in banking. Available now on YouTube, Spotify, and Apple Podcasts, or read the summary below.
(00:00) Market Resurgence and Investor Optimism
Michael opens with observations on the recent uptick in depository M&A and investor participation. Josh and Jason attribute this to investors seeking a catalyst after prolonged underperformance. The late-2024 activity was driven by balance sheet marks, efficiency gains, and capital raising aligned with strategic deals.
(03:00) A Strong Case for Consolidation
Jason recounts how optimism grew after political shifts in mid-2024, highlighted by the WestBanco/Premier deal. Pipelines remain active, with deals ranging from $45M to $2B across geographies. Despite macroeconomic noise, they see early innings of a consolidation wave.
(05:30) Regulatory Relief as a Trigger
Josh highlights regulatory relief as a key unlock for large banks to re-enter the M&A market, which in turn creates trickle-down opportunities for smaller banks. The need for capital raises post-valuation bumps resembles prior waves under past administrations.
(07:30) Temporary Friction vs. Structural Headwinds
Michael asks about tariff-driven market volatility and whether it’s truly a blocker. Both guests agree: temporary frictions like this differ from the structural issues of past cycles. Market normalization should help unlock more deals.
(09:15) Deal Selectivity and Buyer Constraints
Jason notes sellers often fixate on dollar figures instead of long-term ownership stakes. Buyers today are more selective and constrained, only pursuing top-tier targets. Advisors play a bigger role in helping clients prioritize.
(11:15) Capitalization Trends and Tools
Josh argues that while banks are still well-capitalized on paper, investors now scrutinize tangible book value growth. He outlines tools like sub-debt and preferred equity, but reiterates that common equity remains key this cycle.
(14:30) Refinancing and Preferred Issuance
Jason describes how refinancing needs are rising as 2020–21 sub-debt deals reset at higher rates. Larger banks are looking at preferred equity for Tier 1 optimization. With scarce supply, preferred instruments are becoming more appealing.
(17:00) Institutional Appetite Is Returning
Institutional PMs are starting to turn bullish on banks again, anticipating double-digit earnings growth. With strong margins and benign credit quality, investors are ready to deploy, but they want smart, selective M&A.
(18:20) Why Banks Sell
The top reasons? Management age and strategic exhaustion. Public banks weigh shareholder value; private ones deal with succession and unforeseen challenges. Both require proactive strategic planning.
(19:45) Regulatory Sentiment
Both Josh and Jason note improved timelines and transparency from regulators. Early signs suggest a more favorable stance toward M&A, though the environment needs more announced deals to fully assess the shift.
(21:55) Teachable Moments in Failed Deals
Josh emphasizes the importance of confidentially marketed follow-ons to avoid failed capital raises. Jason stresses conviction, many deals fail due to sellers’ hesitation amid uncertainty. Building buyer relationships early is key.
(26:30) Investor Relations in a Tough Environment
With diminished AUM in small bank equities, it’s harder to get investor attention. Jason advises staying focused on EPS and book value growth. He suggests that M&A will help unlock value and that patient, long-horizon investors will benefit.
(29:15) Unlocking the Funnel
Josh wraps up by stressing that large-bank M&A activity is the key to lifting valuations across the board. With new capital sources emerging and regulatory attitudes shifting, those with the will and the fortitude can make it work.
