AOBA: The return of optimism

Bank Director Magazine’s 2026 Acquire or Be Acquired (“AOBA”) conference in Scottsdale, AZ wrapped up last week. With over 2,000 attendees, 99 presentations, and 64 exhibitors, this annual gab-fest is the banking industry kick-off event of the year. The conference is refreshingly explicit about its purpose: in a year when M&A sits near the top of the agenda for many bank and nonbank financial executives, AOBA is both timely and essential.

The Klaros team met with more than two dozen industry participants— including commercial and investment bankers, attorneys, and fellow investors and consultants—to exchange views on current market dynamics. As the conference title suggests, AOBA’s M&A focus remains particularly relevant to Klaros Capital’s private capital and special situations investing. 

Our clear takeaway from meetings, dinners, and hallway conversations was that a strong sense of optimism has returned to the bank deal-making ecosystem. After several difficult years for the industry—marked by the most aggressive rate-hike cycle in four decades, which exposed balance-sheet vulnerabilities and was compounded by heightened geopolitical uncertainty—a more pragmatic regulatory posture is fueling renewed confidence. The result is a virtuous cycle: merger approvals are arriving faster than expected, which in turn encourages further discussions and an accelerating pace of new announcements. Coincidentally, during the AOBA conference, two New Jersey community banks announced a merger, and Spain’s Banco Santander announced an agreement to acquire Connecticut-based Webster Bank for over $12 billion—one of the largest U.S. bank acquisitions in the past decade.

Despite signs of labor market weakness and what some economists describe as a K‑shaped recovery—with professionals seeing improving prospects while lower‑wage workers continue to face employment challenges—AOBA attendees remained firmly focused on transaction opportunities. In 2025, according to S&P Global Market Intelligence, 182 bank transactions were announced, involving targets with approximately $411 billion in combined assets and more than $49 billion in aggregate deal value, exceeding the total combined transaction value of the prior three years. Several industry participants noted that buyer interest currently outweighs the supply of willing sellers, and the pursuit of efficiency and scale is creating a palpable urgency to consolidate. 

We noted one panel titled “Doing Deals in the Age of Shareholder Activism.” Our conversations underscored that consolidation to achieve scale remains essential, but that strategic rationale and expected returns must be robust enough to withstand rigorous scrutiny from all shareholders. The notion of a buyer pursuing two acquisitions concurrently—once almost unthinkable outside of FDIC‑assisted situations—now elicited little surprise. Notably, there was also minimal discussion of commercial real estate credit risk or concentrations in our meetings; in many markets—Texas among them—the scarcity of attractive targets has become the dominant concern, likely pushing valuations higher.

All parties expressed confidence that pending, rumored, and active discussions will soon translate into announced transactions likely to be well received by the market. Participants also expect regulatory policy to remain pragmatic and capital markets to stay efficient—conditions that should sustain the current M&A momentum. If so, 2026 could be another blockbuster year for bank consolidation, potentially surpassing the aggregate deal value of 2025. The hope, of course, is that the resulting institutions execute effectively and that today’s pragmatic regulatory stance does not inadvertently seed systemic vulnerabilities in the next cycle—a topic well worth exploring at the 2027 AOBA conference.