Most notably, UMB Financial in Kansas City, Missouri, said Monday it struck a deal to buy Heartland Financial USA in Denver in an all-stock transaction valued at $2 billion. The acquisition, slated to close in the first quarter of 2025, marks the largest bank deal announced since 2021. The $45.3 billion-asset would-be acquirer said it was confident in its ability to secure regulatory approvals to absorb the $19.4 billion-asset Heartland — the major hurdle standing in the way of larger deals over the past couple of years.

"We have been keeping our prudential regulators and other agencies engaged throughout our due diligence business, and because of the feedback we have received, we're excited to move forward," UMB Chairman and CEO J. Mariner Kemper told analysts during a call on Monday.

In the wake of elevated regulatory scrutiny ordered by President Biden in 2021, several acquisitions were delayed and a few were nixed entirely. This discouraged some deal discussion, with acquisitive banks growing reluctant to commit to a deal that might get mired in a protracted, expensive regulatory process.  

"Regulatory scrutiny is an ever-present risk to M&A transactions in today's climate," D.A Davidson analyst Jeff Rulis said after UMB announced its bid for Heartland, which does business as HTLF. But UMB's confidence and strategic rationale make a case for M&A that regulators appears to recognize.

Rulis noted UMB inked the deal in pursuit of business line and geographic diversity, aiming to expand in major markets throughout the Midwest, South and West. "Scale and metro market density were stated strategic drivers of the combination" as well as a "diversified business model," Rulis said.

What's more, the $21.2 billion-asset Eastern Bankshares in Boston said it now expects to get regulatory approvals for its delayed acquisition of in-state peer Cambridge Bancorp during the second quarter and close the transaction shortly thereafter. Eastern valued the proposed acquisition of the $5.4 billion-asset Cambridge at $528 million when it was announced last September. The all-stock deal was initially scheduled to close in the first quarter, but it was delayed because of drawn-out regulatory reviews.

"We expect those approvals later this quarter, and we expect to close the merger in early July," Eastern Chief Financial Officer James Fitzgerald said during the company's first-quarter earnings call on Friday. Regulators were "very clear that they want to support us, I think, and they know our timelines for this and have communicated that they believe they will put us in a position to meet them."

Also on Monday, the $18 billion-asset Hope Bancorp in Los Angeles said it would buy the $2.2 billion-asset Territorial Bancorp in Hawaii for $78.6 million. It followed news last Friday that the $27.6 billion-asset Fulton Financial's bank in Lancaster, Pennsylvania, would acquire most of the $6 billion of assets from the failed Republic First Bank in Philadelphia.

While the latter deal involved a failure, it was nevertheless a bid for diversification and greater size, said John Mackerey, an analyst at Morningstar DBRS. "In recent years, Fulton has been expanding its presence in larger metropolitan areas, including Philadelphia, and this transaction accelerates that strategy," he said. 

Of note, a pair of Illinois community banks also agreed to combine on Monday. Monmouth-based Western Illinois Bancshares and Princeville-based Main Street Bancorp agreed to merge in an all-stock transaction expected to close late this year. The merged bank would have about $800 million of assets. Financial terms were not disclosed.

Earlier this month, Wintrust Financial in Rosemont, Illinois, inked a $510.3 million all-stock deal to buy Macatawa Bank Corp. in Holland, Michigan. It marked the second-largest deal of this year. The $2.7 billion-asset seller would join the $56 billion-asset Wintrust's lineup of 15 community banks in the Midwest should the deal close as planned in the second half of this year.

While a few deals do not make a trend, the spate of activity to close out April was welcomed by bankers at a Piper Sandler conference this week, said Stephen Scouten, an analyst at the firm. The announcements were "mildly encouraging to most in attendance," he said.

Scouten said M&A activity still has much ground to regain this year, "but conversations remain prevalent and deal volume could pick up from 2023 lows."

In addition to the regulatory headwinds, a surge in interest rates over the past two years spurred worry about an economic downturn and curbed some buyers' appetites. Recessions often hinder borrowers' ability to repay loans, causing higher credit losses for banks. This includes possible sellers; as a result, many would-be buyers tapped the brakes on M&A plans.

U.S. banks announced 100 acquisitions in 2023 with a total deal value of $4.2 billion, according to updated S&P Global Market Intelligence data. Both measures were markedly lower than the previous year, when banks announced 157 deals with a total deal value of $9 billion. And 2022 was a relatively slow year compared to 2021, when 202 deals valued at $76.7 billion were announced.

During the first quarter, 26 banks announced plans to sell. Those deals carried an aggregate deal value of $1.1 billion, according to S&P Global. That represented a substantial advance from the year-earlier quarter, when there were 20 bank deals worth a total of $433 million.