Etude

Hidden Gems: How to Find the US Bank M&A Targets Everyone Else Is Missing

The best dealmakers will win with strategic fit, capabilities, and actionability, not just scale and firepower.

Par Joe Lischwe, Dirk Vater, Joe Fielding, et Phil Anselmino

First published on août 24, 2026
min


En Bref The next wave of US commercial banking consolidation is building, and we expect at least one bank to cross the $1 trillion asset threshold via M&A. Banks should go beyond traditional M&A screening to gain a systematic view of targets that would fill their gaps, including under-the-radar options. With combined scale-and-scope deals outperforming, executive teams should also consider buying the right fintech challengers to extend their bank’s capabilities. The four largest US commercial banks have had equally big reasons to celebrate this summer. JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo—the only US commercial banks with more than $1 trillion in assets—all reported blowout second-quarter earnings, just like the biggest US investment banks. Part of the success of the thriving quartet reflects raw scale: They have been the only members of commercial banking’s top tier for almost two decades. However, they might have to share their pedestal with more peers in the not-too-distant future. New Bain modeling based on 20 years of sector data and past M&A suggests that the current US commercial banking consolidation wave has much further to run, with profound changes still to come, particularly at the top of the market, where deals involving regional financial institutions are likely to vault at least one enlarged commercial bank into the $1 trillion-plus tier. Having grown 19% in 2025, the value of announced deals in US commercial banking rose by a more modest 7% year over year in the first half of 2026, according to Refinitiv data (see Figure 1). The first six months of this year featured one of the largest US bank deals of the current cycle: Santander’s $12.2 billion acquisition of Webster Financial unveiled in February. Although this meant other activity was more constrained than the headline first-half growth figure suggests, we’re confident that M&A teams were merely pausing for breath. Figure 1 After the value of announced deals grew strongly in 2025, US bank M&A teams paused for breath in the first half of 2026 Note: Deals valued at announcement date Sources: Bain & Company; Refinitiv Although deal flow is set to remain lumpy, more big transactions are likely as banks seize a historic opportunity to strengthen their competitive position and reconfigure their capabilities for the AI era. Our research suggests that the number of US commercial banks holding more than $1 trillion in assets will rise for the first time since 2008, when Wells Fargo bought Wachovia. By the end of 2030, we expect the ranks of this $1 trillion club to swell from four to between five and seven as large regional banks consolidate; in turn, that’s likely to fuel a reduction in large regionals, from 49 at the end of 2025 to between 30 and 40 in 2030 (see Figure 2). Figure 2 By the end of 2030, we expect at least one additional US commercial bank to surpass $1 trillion in assets Notes: Community bank numbers have been rounded to the nearest hundred; fintech numbers are rounded estimates Source: Bain & Company The last big redrawing of the competitive landscape in US banking was driven by necessity amid the 2007–2008 global financial crisis. Now, regulatory tailwinds are a major factor. Under the Trump administration’s more pro-consolidation agenda, deal approvals are faster, antitrust scrutiny below $250 billion in assets has eased, and capital requirements are moderating. This regulatory shift is accelerating standalone industry trends, such as AI-related cost reduction, to create ideal dealmaking conditions likely to last for two to three years. Of course, banks need to find the right targets before they can move. Despite their willingness to transact, many executive teams are finding target selection difficult, which we see as one of the reasons for the relative lull in dealmaking during the first half of 2026. To take full advantage of the favorable M&A conditions, leading banks should look beyond standard metrics and screening to gain a systematic and individualized readout on which deal combinations would strengthen both their scale and their capabilities, particularly in fintech. A new approach for the next burst of M&A In the US, there’s no shortage of banks with significant firepower. At the end of June 2026, 17 were carrying more than $10 billion in excess capital over and above what regulators and prudent buffers require, and seven were holding more than $20 billion (see Figure 3). Figure 3 Firepower is widespread, with 17 US banks holding more than $10 billion in excess capital at the end of June 2026 Notes: Assets and excess capital measured at the end of June 2026; price-to-book ratio measured on July 20, 2026 Sources: S&P Capital IQ; Bain analysis While this is a crude signal that more deals are likely, it’s no guide to how the industry is likely to evolve. And other metrics such as price-to-book ratio and asset size are equally flawed M&A yardsticks. Even a sophisticated blend of scale and valuation metrics would struggle to give executive teams a reliable steer on where to move and where rivals will pounce. Consolidation isn’t likely to follow the pattern that these metrics suggest, partly because they don’t take capabilities into account. With success in banking increasingly defined by what a bank can do, particularly through digital technology and AI, more deals will be motivated by the need to fill capability gaps. Traditional metrics also overlook the human factors of dealmaking, such as the willingness of a seller (or sellers) to transact, while treating scale as uniform and ignoring market density. Santander’s purchase of Webster is a case in point. On traditional M&A filters focused on size, geography, and banking financial metrics, it would not have been an obvious fit, and more conventional screening would likely have ruled this combination out—unnecessarily, as it turned out. On paper, the overlap between the two banks in the northeast could have been seen as a problematic deposit-base cannibalization. In practice, however, the deal should deepen the combined institution’s presence exactly where density matters. A filter tuned to scale would have also overlooked what made the deal compelling: the capabilities in Webster’s health savings account franchise and, decisively, a board that was willing to sell. To stay ahead of the next wave of consolidation, executive teams at prospective buyers should follow a two-stage approach that remedies the failings of traditional M&A screening by emphasizing strategic fit as much as firepower and actionability as much as asset size. Rather than producing the same list of obvious candidates that most banks are considering, such a shift can unearth hidden gems. First, banks need an honest readout on where they stand across six dimensions. Some of these dimensions are standard in most M&A screens: financial scale and returns, business mix and diversification, and quality of funding and liquidity. The other three dimensions are less standard in our experience, but they are the ones that tend to point to the most differentiated M&A opportunities: geographic density, product and capability depth, and technological and AI readiness. Together, these six dimensions then become the yardstick for every external acquisition candidate. Second, banks should test the potential candidates through four lenses. Three focus on value: Does the target close a gap that the bank has actually measured (the strategic fit lens)? Would the bank want the business on its own merits (the standalone attractiveness lens)? And is it worth more to this buyer than to any rival bidder (the value creation lens)? The fourth focuses on something different: Is the owner in a position to transact, and is the asset a size that the buyer can digest? This actionability lens is treated as an afterthought by some screens, but it’s often the factor that decides the outcome. When we backtested this approach against nine of the largest and most strategic North American bank deals completed in recent years, the eventual acquisition target in eight cases ranked near the top of our screening list of more than 1,000 banking assets, using only data available before each deal was announced. More importantly, when we apply this two-stage approach bank by bank to the universe of current M&A opportunities, including the often-uncharted possibilities within the fintech landscape, we see a lot of actionable deals that could materially strengthen the strategic position of the acquirer. But they aren’t always the ones that seem most compelling initially. Consider a large regional commercial bank that has adequate scale but lags peers on valuation and fee mix, indicating that it should target capability-led acquisitions as it aspires to become a national player. The first-stage screen surfaces six candidates. But the two that prove most compelling aren’t the highest scoring initially, ranking second and fourth instead. What ultimately lifts them above the ostensibly better-rated options is something that traditional screening ignores: They are genuinely actionable. The obvious targets, on closer inspection, were the ones that a rival could just as easily reach or that a seller may never release. The case for AI-native fintechs None of this is to say that scale is no longer important; it’s more that scale on its own won’t enable a bank to win. As AI continues to raise the bar for what a bank can and should do, cutting-edge and differentiated capabilities will be increasingly crucial to success, particularly in areas such as digital user experience, cloud infrastructure, and embedded finance. Against this backdrop, we expect more banks, particularly regional players, to use M&A to add capabilities that extend the scope of their business. The good news is that given recent market conditions, scope acquisitions have been particularly potent when they also added scale. When we analyzed US banking deals from the past two years, we found that the total shareholder return was 14 percentage points to 18 percentage points higher for these blended deals vs. scale-only deals or the status quo (see Figure 4). Figure 4 Recently, deals that combine scale and scope have generated better shareholder returns for US commercial banks Notes: Deals all involve commercial banks; total shareholder return (TSR) measured over a two-year window from deal announcement date or up to June 26, 2026, if two years not elapsed at that point; inactive bank TSR measured over two years to June 26, 2026 Sources: S&P Capital IQ; Bain analysis To fully understand the M&A possibilities, executive teams should look again at fintech challengers, even though many incumbents have been reluctant to bid for them. That hesitation is understandable, and not just because of integration risk. Amid AI disruption, it’s hard to tell durable differentiation from vaporware. Blowups in the banking-as-a-service sector have also made bank boards reluctant to target fintechs. Without minimizing these worries, we think that US banks should revisit fintech acquisition opportunities to expand their pool of possible combined scale-and-scope deals, or even just scope deals. For one thing, the capabilities that fintechs bring can offer banks a strong form of defense in a consolidating sector. Fintechs also tend to lack the strategic moats (such as a low-cost, sticky deposit base) that protect incumbents, making deals more doable. The window for action may not remain open for long because the smartest acquirers are already moving: Consider Capital One’s $5.15 billion acquisition of AI-native software platform Brex, completed in April. Fintechs aren’t waiting to be bought either. A substantial number of fintech, crypto, and payments firms requested or received US bank charters in the first half of 2026, including Revolut, which applied in March. Some fintechs have been even more direct by buying a bank, such as SmartBiz, which completed the purchase of Centrust Bank in March 2025, and Enova, which announced the acquisition of Grasshopper Bank in December 2025. In the next wave of US commercial banking consolidation, the most dangerous bidder for a regional bank’s capabilities may not be another bank. As the line between acquirer and acquired dissolves, incumbents that hesitate could be absorbed by bold fintechs.

En Bref

The next wave of US commercial banking consolidation is building, and we expect at least one bank to cross the $1 trillion asset threshold via M&A.
Banks should go beyond traditional M&A screening to gain a systematic view of targets that would fill their gaps, including under-the-radar options.
With combined scale-and-scope deals outperforming, executive teams should also consider buying the right fintech challengers to extend their bank’s capabilities.

The four largest US commercial banks have had equally big reasons to celebrate this summer. JPMorgan Chase, Bank of America, Citigroup, and Wells Fargo—the only US commercial banks with more than $1 trillion in assets—all reported blowout second-quarter earnings, just like the biggest US investment banks.

Part of the success of the thriving quartet reflects raw scale: They have been the only members of commercial banking’s top tier for almost two decades. However, they might have to share their pedestal with more peers in the not-too-distant future.

New Bain modeling based on 20 years of sector data and past M&A suggests that the current US commercial banking consolidation wave has much further to run, with profound changes still to come, particularly at the top of the market, where deals involving regional financial institutions are likely to vault at least one enlarged commercial bank into the $1 trillion-plus tier.

Having grown 19% in 2025, the value of announced deals in US commercial banking rose by a more modest 7% year over year in the first half of 2026, according to Refinitiv data (see Figure 1). The first six months of this year featured one of the largest US bank deals of the current cycle: Santander’s $12.2 billion acquisition of Webster Financial unveiled in February. Although this meant other activity was more constrained than the headline first-half growth figure suggests, we’re confident that M&A teams were merely pausing for breath.

visualization — After the value of announced deals grew strongly in 2025, US bank M&A teams paused for breath in the first half of 2026

Although deal flow is set to remain lumpy, more big transactions are likely as banks seize a historic opportunity to strengthen their competitive position and reconfigure their capabilities for the AI era. Our research suggests that the number of US commercial banks holding more than $1 trillion in assets will rise for the first time since 2008, when Wells Fargo bought Wachovia. By the end of 2030, we expect the ranks of this $1 trillion club to swell from four to between five and seven as large regional banks consolidate; in turn, that’s likely to fuel a reduction in large regionals, from 49 at the end of 2025 to between 30 and 40 in 2030 (see Figure 2).

The last big redrawing of the competitive landscape in US banking was driven by necessity amid the 2007–2008 global financial crisis. Now, regulatory tailwinds are a major factor. Under the Trump administration’s more pro-consolidation agenda, deal approvals are faster, antitrust scrutiny below $250 billion in assets has eased, and capital requirements are moderating. This regulatory shift is accelerating standalone industry trends, such as AI-related cost reduction, to create ideal dealmaking conditions likely to last for two to three years.

Of course, banks need to find the right targets before they can move. Despite their willingness to transact, many executive teams are finding target selection difficult, which we see as one of the reasons for the relative lull in dealmaking during the first half of 2026. To take full advantage of the favorable M&A conditions, leading banks should look beyond standard metrics and screening to gain a systematic and individualized readout on which deal combinations would strengthen both their scale and their capabilities, particularly in fintech.

A new approach for the next burst of M&A

In the US, there’s no shortage of banks with significant firepower. At the end of June 2026, 17 were carrying more than $10 billion in excess capital over and above what regulators and prudent buffers require, and seven were holding more than $20 billion (see Figure 3).

While this is a crude signal that more deals are likely, it’s no guide to how the industry is likely to evolve. And other metrics such as price-to-book ratio and asset size are equally flawed M&A yardsticks. Even a sophisticated blend of scale and valuation metrics would struggle to give executive teams a reliable steer on where to move and where rivals will pounce.

Consolidation isn’t likely to follow the pattern that these metrics suggest, partly because they don’t take capabilities into account. With success in banking increasingly defined by what a bank can do, particularly through digital technology and AI, more deals will be motivated by the need to fill capability gaps. Traditional metrics also overlook the human factors of dealmaking, such as the willingness of a seller (or sellers) to transact, while treating scale as uniform and ignoring market density.

Santander’s purchase of Webster is a case in point. On traditional M&A filters focused on size, geography, and banking financial metrics, it would not have been an obvious fit, and more conventional screening would likely have ruled this combination out—unnecessarily, as it turned out. On paper, the overlap between the two banks in the northeast could have been seen as a problematic deposit-base cannibalization. In practice, however, the deal should deepen the combined institution’s presence exactly where density matters. A filter tuned to scale would have also overlooked what made the deal compelling: the capabilities in Webster’s health savings account franchise and, decisively, a board that was willing to sell.

To stay ahead of the next wave of consolidation, executive teams at prospective buyers should follow a two-stage approach that remedies the failings of traditional M&A screening by emphasizing strategic fit as much as firepower and actionability as much as asset size. Rather than producing the same list of obvious candidates that most banks are considering, such a shift can unearth hidden gems.

First, banks need an honest readout on where they stand across six dimensions. Some of these dimensions are standard in most M&A screens: financial scale and returns, business mix and diversification, and quality of funding and liquidity. The other three dimensions are less standard in our experience, but they are the ones that tend to point to the most differentiated M&A opportunities: geographic density, product and capability depth, and technological and AI readiness. Together, these six dimensions then become the yardstick for every external acquisition candidate.

Second, banks should test the potential candidates through four lenses. Three focus on value: Does the target close a gap that the bank has actually measured (the strategic fit lens)? Would the bank want the business on its own merits (the standalone attractiveness lens)? And is it worth more to this buyer than to any rival bidder (the value creation lens)? The fourth focuses on something different: Is the owner in a position to transact, and is the asset a size that the buyer can digest? This actionability lens is treated as an afterthought by some screens, but it’s often the factor that decides the outcome.

When we backtested this approach against nine of the largest and most strategic North American bank deals completed in recent years, the eventual acquisition target in eight cases ranked near the top of our screening list of more than 1,000 banking assets, using only data available before each deal was announced.

More importantly, when we apply this two-stage approach bank by bank to the universe of current M&A opportunities, including the often-uncharted possibilities within the fintech landscape, we see a lot of actionable deals that could materially strengthen the strategic position of the acquirer. But they aren’t always the ones that seem most compelling initially.

Consider a large regional commercial bank that has adequate scale but lags peers on valuation and fee mix, indicating that it should target capability-led acquisitions as it aspires to become a national player. The first-stage screen surfaces six candidates. But the two that prove most compelling aren’t the highest scoring initially, ranking second and fourth instead. What ultimately lifts them above the ostensibly better-rated options is something that traditional screening ignores: They are genuinely actionable. The obvious targets, on closer inspection, were the ones that a rival could just as easily reach or that a seller may never release.

The case for AI-native fintechs

None of this is to say that scale is no longer important; it’s more that scale on its own won’t enable a bank to win. As AI continues to raise the bar for what a bank can and should do, cutting-edge and differentiated capabilities will be increasingly crucial to success, particularly in areas such as digital user experience, cloud infrastructure, and embedded finance.

Against this backdrop, we expect more banks, particularly regional players, to use M&A to add capabilities that extend the scope of their business. The good news is that given recent market conditions, scope acquisitions have been particularly potent when they also added scale. When we analyzed US banking deals from the past two years, we found that the total shareholder return was 14 percentage points to 18 percentage points higher for these blended deals vs. scale-only deals or the status quo (see Figure 4).

To fully understand the M&A possibilities, executive teams should look again at fintech challengers, even though many incumbents have been reluctant to bid for them. That hesitation is understandable, and not just because of integration risk. Amid AI disruption, it’s hard to tell durable differentiation from vaporware. Blowups in the banking-as-a-service sector have also made bank boards reluctant to target fintechs.

Without minimizing these worries, we think that US banks should revisit fintech acquisition opportunities to expand their pool of possible combined scale-and-scope deals, or even just scope deals. For one thing, the capabilities that fintechs bring can offer banks a strong form of defense in a consolidating sector. Fintechs also tend to lack the strategic moats (such as a low-cost, sticky deposit base) that protect incumbents, making deals more doable.

The window for action may not remain open for long because the smartest acquirers are already moving: Consider Capital One’s $5.15 billion acquisition of AI-native software platform Brex, completed in April. Fintechs aren’t waiting to be bought either. A substantial number of fintech, crypto, and payments firms requested or received US bank charters in the first half of 2026, including Revolut, which applied in March. Some fintechs have been even more direct by buying a bank, such as SmartBiz, which completed the purchase of Centrust Bank in March 2025, and Enova, which announced the acquisition of Grasshopper Bank in December 2025.

In the next wave of US commercial banking consolidation, the most dangerous bidder for a regional bank’s capabilities may not be another bank. As the line between acquirer and acquired dissolves, incumbents that hesitate could be absorbed by bold fintechs.