The Long and Short
Updating the M&A landscape for US regional banks
This document is intended for institutional investors and is not subject to all of the independence and disclosure standards applicable to debt research reports prepared for retail investors. This material does not constitute research.
It has been a very active year for bank consolidation in the US, with the most recent deal announced by US Bancorp (USB) to purchase the bulk of US banking operations from MUFG (the old Union Bank branch network). A re-cap of noteworthy merger and acquisition activity shows that several of the bank candidates identified in last year’s study have already been linked in deals announced throughout 2021. An update to our universe of US bank merger candidates with public debt outstanding is available for event driven corporate investors.
In late 2020, two major regional bank mergers were announced prompting our study – PNC Financial’s purchase of BBVA USA Bancshares for $11.6 billion, which is very similar to the recent USB/MUFG deal, and Huntington Bancshares purchase of TCF Financial for just over $5 billion. A further wave of consolidation had long been percolating in the sector. Low rates and weak loan demand make operating efficiency one of the best ways for banks to defend profits. Bank balance sheets have expanded over the past few years as deposits have ballooned. Meanwhile, the prospect for loan growth has remained muted with tempered demand that even preceded the pandemic. These factors, along with easy access to capital, had helped create an ideal environment for further bank deals to be announced. Bank regulators have also been increasingly receptive to mergers of relevant size among regional banks.
USB’s merger announcement with MUFG on 9/21/21 was just the most recent of several noteworthy deals in 2021. The deal will add $105 billion in US bank assets and $90 billion in deposits. USB agreed to pay $8 billion, with $5.5 billion coming in cash/debt and the remainder in stock. The bank currently has a massive cash stockpile on the balance sheet but could still choose to bring a portion of the cash funding in debt given how cheap it would be for USB to issue debt. Moody’s and S&P both affirmed USB’s A2/A+ ratings, but revised their outlooks to Negative from Stable, mostly reflecting the execution risks of the deal. Fitch affirmed USB’s rating at AA- and left the outlook unchanged at AA-.
Other notable bank acquisitions in 2021 include Citizens Financial Group’s (CFG) agreement to purchase of Investors Bancorp (ISBC) for $3.6 billion announced on 07/28/21. ISBC had no public debt outstanding so it was not a part of our study in late 2020, but the size of $27 billion in total assets was within the parameters of our search. Also announced year-to-date was New York Community Bancorp’s (NYCB) purchase of Flagstar Bancorp (FBC) for $2.6 billion on 04/26/21. Both NYCB and FBC were included in our list of merger candidates last year, and the deal will add $29 billion in assets to NYCB’s $38 billion in total assets as of 2Q21. Several days prior on 04/19/21, Webster Financial (WBS) announced a deal for Sterling Bancorp (STL) for $5.9 billion, which is expected to close by year-end. Again, both banks with current assets of $34 billion and $29 billion, respectively, were listed among our merger candidates in late 2020. Lastly, M&T Bank Corp (MTB) announced a deal with People’s United Financial (PBCT) for roughly $5.3 billion on 02/22/21, in a deal that will add approximately $63 billion in assets to MTB $151 billion as of 2Q21. That deal is also expected to close by year-end 2021.
Exhibit 1. Last year’s 2020 Bank Merger Candidates – Highlighted banks have announced mergers as either a buyer or target since the publication of our last study
Source: Amherst Pierpont, Bloomberg LP
To update our pool of potential merger candidates for investors to target in the corporate bond market we are once again running a screen to identify large community and smaller regional banks. This time we are expanding the search to banks with total assets of between $20 billion to $100 billion from the $75 billion max in last year’s study, given that the BBVA USA and MUFG Union bank deals each had assets of just over $100 billion. We then limit our search to banks with public debt deals with at least $20 million outstanding, which would make them more available to target in the secondary bond market.
Exhibit 2. 2021 Bank Merger Candidates – Shaded banks have already been announced as targets in ongoing/recently closed mergers
Source: Amherst Pierpont, Bloomberg LP
This material is intended only for institutional investors and does not carry all of the independence and disclosure standards of retail debt research reports. In the preparation of this material, the author may have consulted or otherwise discussed the matters referenced herein with one or more of SCM’s trading desks, any of which may have accumulated or otherwise taken a position, long or short, in any of the financial instruments discussed in or related to this material. Further, SCM may act as a market maker or principal dealer and may have proprietary interests that differ or conflict with the recipient hereof, in connection with any financial instrument discussed in or related to this material.
This message, including any attachments or links contained herein, is subject to important disclaimers, conditions, and disclosures regarding Electronic Communications, which you can find at https://portfolio-strategy.apsec.com/sancap-disclaimers-and-disclosures.
Important Disclaimers
Copyright © 2025 Santander US Capital Markets LLC and its affiliates (“SCM”). All rights reserved. SCM is a member of FINRA and SIPC. This material is intended for limited distribution to institutions only and is not publicly available. Any unauthorized use or disclosure is prohibited.
In making this material available, SCM (i) is not providing any advice to the recipient, including, without limitation, any advice as to investment, legal, accounting, tax and financial matters, (ii) is not acting as an advisor or fiduciary in respect of the recipient, (iii) is not making any predictions or projections and (iv) intends that any recipient to which SCM has provided this material is an “institutional investor” (as defined under applicable law and regulation, including FINRA Rule 4512 and that this material will not be disseminated, in whole or part, to any third party by the recipient.
The author of this material is an economist, desk strategist or trader. In the preparation of this material, the author may have consulted or otherwise discussed the matters referenced herein with one or more of SCM’s trading desks, any of which may have accumulated or otherwise taken a position, long or short, in any of the financial instruments discussed in or related to this material. Further, SCM or any of its affiliates may act as a market maker or principal dealer and may have proprietary interests that differ or conflict with the recipient hereof, in connection with any financial instrument discussed in or related to this material.
This material (i) has been prepared for information purposes only and does not constitute a solicitation or an offer to buy or sell any securities, related investments or other financial instruments, (ii) is neither research, a “research report” as commonly understood under the securities laws and regulations promulgated thereunder nor the product of a research department, (iii) or parts thereof may have been obtained from various sources, the reliability of which has not been verified and cannot be guaranteed by SCM, (iv) should not be reproduced or disclosed to any other person, without SCM’s prior consent and (v) is not intended for distribution in any jurisdiction in which its distribution would be prohibited.
In connection with this material, SCM (i) makes no representation or warranties as to the appropriateness or reliance for use in any transaction or as to the permissibility or legality of any financial instrument in any jurisdiction, (ii) believes the information in this material to be reliable, has not independently verified such information and makes no representation, express or implied, with regard to the accuracy or completeness of such information, (iii) accepts no responsibility or liability as to any reliance placed, or investment decision made, on the basis of such information by the recipient and (iv) does not undertake, and disclaims any duty to undertake, to update or to revise the information contained in this material.
Unless otherwise stated, the views, opinions, forecasts, valuations, or estimates contained in this material are those solely of the author, as of the date of publication of this material, and are subject to change without notice. The recipient of this material should make an independent evaluation of this information and make such other investigations as the recipient considers necessary (including obtaining independent financial advice), before transacting in any financial market or instrument discussed in or related to this material.
Important disclaimers for clients in the EU and UK
This publication has been prepared by Trading Desk Strategists within the Sales and Trading functions of Santander US Capital Markets LLC (“SanCap”), the US registered broker-dealer of Santander Corporate & Investment Banking. This communication is distributed in the EEA by Banco Santander S.A., a credit institution registered in Spain and authorised and regulated by the Bank of Spain and the CNMV. Any EEA recipient of this communication that would like to affect any transaction in any security or issuer discussed herein should do so with Banco Santander S.A. or any of its affiliates (together “Santander”). This communication has been distributed in the UK by Banco Santander, S.A.’s London branch, authorised by the Bank of Spain and subject to regulatory oversight on certain matters by the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA).
The publication is intended for exclusive use for Professional Clients and Eligible Counterparties as defined by MiFID II and is not intended for use by retail customers or for any persons or entities in any jurisdictions or country where such distribution or use would be contrary to local law or regulation.
This material is not a product of Santander´s Research Team and does not constitute independent investment research. This is a marketing communication and may contain ¨investment recommendations¨ as defined by the Market Abuse Regulation 596/2014 ("MAR"). This publication has not been prepared in accordance with legal requirements designed to promote the independence of research and is not subject to any prohibition on dealing ahead of the dissemination of investment research. The author, date and time of the production of this publication are as indicated herein.
This publication does not constitute investment advice and may not be relied upon to form an investment decision, nor should it be construed as any offer to sell or issue or invitation to purchase, acquire or subscribe for any instruments referred herein. The publication has been prepared in good faith and based on information Santander considers reliable as of the date of publication, but Santander does not guarantee or represent, express or implied, that such information is accurate or complete. All estimates, forecasts and opinions are current as at the date of this publication and are subject to change without notice. Unless otherwise indicated, Santander does not intend to update this publication. The views and commentary in this publication may not be objective or independent of the interests of the Trading and Sales functions of Santander, who may be active participants in the markets, investments or strategies referred to herein and/or may receive compensation from investment banking and non-investment banking services from entities mentioned herein. Santander may trade as principal, make a market or hold positions in instruments (or related derivatives) and/or hold financial interest in entities discussed herein. Santander may provide market commentary or trading strategies to other clients or engage in transactions which may differ from views expressed herein. Santander may have acted upon the contents of this publication prior to you having received it.
This publication is intended for the exclusive use of the recipient and must not be reproduced, redistributed or transmitted, in whole or in part, without Santander’s consent. The recipient agrees to keep confidential at all times information contained herein.
