TD Cowen Predicts Bank M&A Surge Ahead of 2028 Election, Names Top Targets

A new report from investment bank TD Cowen suggests U.S. banks face a closing window for mergers and acquisitions, driven by the prospect of a tighter regulatory environment following the 2028 presidential election. The firm identified 38 potential sellers, highlighting four as top targets for potential takeovers.

A Closing Regulatory Window

According to a report published Tuesday by TD Cowen analyst Janet Lee, the optimal period for deal-making runs from November 2026 through the first quarter of 2027. The analysis sets a hard deadline of Q3 2027, after which political risk is expected to rise significantly.

The firm's Washington Research Group anticipates that a potential shift in congressional control ahead of the 2028 election cycle could lead to a more stringent bank merger review process. "We see stars aligning for a bank M&A rebound in 2027, as the favorable regulatory window narrows ahead of the '28 presidential election," Lee wrote.

Potential Targets and Acquirers

Using a proprietary screening framework based on approximately 100 historical bank transactions, TD Cowen identified a list of potential sellers. The report specifically named four mid- and small-cap banks as potential acquisition targets based on strategic fit and buyer interest:

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• Columbia Banking System (NASDAQ: COLB)
• Eagle Bancorp (NASDAQ: EBC)
• First Horizon National (NYSE: FHN)
• Flagstar Financial (NYSE: FLG)

On the buyer side, the report points to Canadian banks, including Royal Bank of Canada (NYSE: RY) and Bank of Montreal (NYSE: BMO), as having "greater potential to pursue cross-border transactions" due to strong capital levels. The analysis also flagged potential domestic pairings, suggesting Eagle Bancorp as a fit for M&T Bank (NYSE: MTB) and either First Horizon or Renasant Corp (NASDAQ: RNST) as potential targets for Regions Financial (NYSE: RF).

The Case for Urgency

The rationale for an M&A rebound stems from motivations on both sides of the deal table. TD Cowen argues that potential sellers may be more willing to consider a sale from a "position of strength" while their fundamentals are healthy, especially as the potential for organic earnings growth moderates.

With the optimal deal window opening in a matter of weeks, the report suggests that boards and advisors would need to begin conversations soon to navigate the regulatory review process before the anticipated Q3 2027 deadline. Investors will be watching for any strategic commentary from management teams during the upcoming earnings season.