Kroll Bond Rating Agency (KBRA) released research on the U.S. bank mergers and acquisitions (M&A) landscape, noting that while deal activity has picked up under a friendlier regulatory environment, it remains limited by high interest rates, scarcity of attractive targets, and balance sheet pressures from negative accumulated other comprehensive income (AOCI).

Recent developments—including shorter approval timelines and Financial Accounting Standards Board (FASB) changes that reduce one-time acquisition charges—support potential dealmaking. Still, many banks are cautious, with management teams setting high hurdles and avoiding weaker targets. Attractive institutions with strong deposit bases remain scarce and often command premium prices.

KBRA expects M&A to remain measured in the near term but sees potential acceleration if interest rates decline and regulatory thresholds shift. The agency evaluates deals on strategic fit, pricing, financial projections, and integration capacity. Generally, well-structured transactions are considered neutral to ratings, with long-term upside possible as banks gain scale and diversification.