Distressed banks may sell, with first-quarter deals reaching $23.2 billion, the largest since 2019.

The slow pace of deal approvals has created an adverse atmosphere for regional bank mergers, with political factors becoming too important.

Regulators may allow more regional bank mergers, but recent delays discourage conversations.

Banks near $100 billion in assets may increase transactions when U.S. capital rules are defined, facing harsher rules and pressure to merge.

Regional banks will have incentives to merge and reach larger scale due to increased regulatory scrutiny and capital requirements.