M&T Bank is the latest to snap up another regional lender
M&T Bank today became the latest to glom on to the "bigger is better" mentality swarming regional banks.
Why it matters: It adds to the parade of regional lenders — which have taken an active role in distributing PPP loans — swallowing each other in an effort to survive a more treacherous backdrop.
- Net interest margin — a key way banks make money — collectively hit an all-time low for U.S. banks last year. The culprits: low interest rates and sluggish lending.
- There's also growing competition from big players, like JPMorgan and Bank of America, that are bulking up in additional states and offering more digital banking options.
Details: M&T is buying People's United Financial for $7.6 billion in an all-stock deal.
- The combined bank would have roughly $200 billion in assets, per the release. That catapults M&T to the fifth-largest regional bank by this measure, according to FactSet. (Previously, it was the 10th).
- Yes, but: Even with the tie-up, M&T won't crack the top 10 biggest banks overall by assets.
The big picture: Today's action follows PNC Financial's purchase of BBVA's U.S. branches last year, which — if approved — would create the largest regional lender in the U.S.
- Another: Huntington announced it would buy regional peer TCF Financial late last year, giving them combined assets of roughly $170 billion.
What they're saying: Part of the thinking is you can consolidate then grow that way, says Stephen Biggar, a banking analyst at research firm Argus Research.
What to watch: The regional tie-ups are among the first bank deals that will face regulatory scrutiny in the Biden era.
- Executives expect the deal will close in the fourth quarter of 2021.