Nuggets Of Wisdom On M&A Or Otherwise From AOBA

Members of our Banking & Financial Services Industry Team attended the "Acquire or Be Acquired" (AOBA) conference hosted by Bank Director on February 1–3 in Phoenix, Arizona. This conference seems to grow considerably every year, and this year approximately 2,200 banking professionals gathered in the desert to discuss the status of the banking industry in the United States and consider matters impacting its environment for growth this year and beyond. Despite the name, not all participants are bankers looking to become buyers or sellers in a merger or acquisition, and many topics discussed were just as relevant for bankers looking to grow organically in 2026. A few of the more interesting topics we heard discussed — by presenters or panelists as part of the planned program, by investment bankers during meetings off the agenda, or otherwise — are listed below:

• Artificial Intelligence (AI) is coming, and it is a potential game changer for the banking industry. Its possibilities are incredibly sexy, but the bulk of the work required for banks to use it effectively is not. Banks wanting to leverage the power of AI must put a lot of effort into cleaning up their pool of data to make it more standardized and interchangeable among product lines before AI can be used effectively for customer service or otherwise. Failure to put a workable AI data infrastructure in place will make any investment in AI much less useful.
• The GENIUS Act, and the potential adoption of the CLARITY Act, have made the previously intangible risk of digital disintermediation very tangible. However, based on surveys conducted by Bank Director, most community bankers are not even moderately concerned about it.
• We could be getting close to the acquisition endgame for the really large banks (i.e., $100 billion in assets or greater). A few more acquisitions could trigger a domino effect that might consolidate that group quickly into about four banks.
• Institutional investors, activists, and nonactivists care about consistent returns and capital management, but more than anything, they don't want to be surprised. Your bank should have a consistent and unified communication plan for reaching out to institutional shareholders.
• The key to bank success in competition with nonbanks (i.e., fintechs) for capital is to reduce net overhead to around 1.25% in order to provide returns that investors need.
• Bank margins are soaring due to loans resetting higher and costs of funds falling, which has the potential to provide banks their most profitable years since the late 1990s.
• Banks should not pursue technology for the sake of technology alone, and there must be a business case for the cost of the technology pursued. Also, banks should focus on implementing one new application at a time.
• The pace of credit unions acquiring community banks seems to be slowing due to several factors, including the lengthier time it is taking the NCUA to approve credit union M&A deals.

As the conversations at AOBA made clear, today's banking landscape is defined by rapid technological advancement, shifting regulatory pressures, and evolving investor expectations. Whether growth is pursued through acquisition or organic strategy, institutions that prioritize data discipline, operational efficiency, and intentional communication will be best positioned to navigate the opportunities ahead. While uncertainty remains — particularly around AI adoption, competitive dynamics, and the regulatory environment — the insights shared in Phoenix underscore a consistent theme: Banks that stay focused, strategic, and adaptable will be well-equipped to thrive in 2026 and beyond.

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