2 Large Regional Bank Stocks That Could Get Acquired During the Trump Administration

Consolidation is expected in the regional banking sector, with Comerica (CMA) and KeyCorp (KEY) identified as potential acquisition targets due to their awkward size relative to larger competitors and lower price-to-tangible book values. Comerica, with $78 billion in assets, faces challenges due to its size and the expiration of a favorable agreement with the U.S. Treasury, while KeyCorp's attractive fee-based businesses and prior sale of a minority stake to Scotiabank could make it appealing; both CEOs have change-in-control agreements that would provide substantial payouts in the event of a sale.

Analysis

The U.S. regional banking industry, particularly for banks with assets ranging from $75 billion to $700 billion, is presented as ripe for consolidation, driven by the necessity for smaller institutions to achieve scale to effectively compete against the "big four" banks and a regulatory environment under the Trump administration described as favorable to mergers and acquisitions, contrasting with the stance under the former Biden administration. Comerica (CMA), with approximately $78 billion in assets as of Q1 2025, is highlighted as a potential acquisition candidate due to its presence in attractive U.S. banking markets such as Texas and the Southeast, despite its "awkward size" and the forthcoming loss of a $3 billion noninterest-bearing deposit relationship with the U.S. Treasury; its lower price-to-tangible book value (TBV) further positions it as a palatable target, although the article notes that "banks are sold and not bought," implying proactive steps from Comerica would be needed. KeyCorp (KEY) is also identified as a potential target, characterized by its valuable capital-light, fee-based businesses, including investment banking and trust services, and a similarly lower price-to-TBV. KeyCorp's recent divestment of a 14.9% stake to Scotiabank for $2.8 billion to improve capital flexibility is noted, with the agreement allowing Scotiabank to increase its stake to only 19.9% over the next five years, potentially leaving room for other suitors. Significantly, the CEOs of both Comerica and KeyCorp, Curtis Farmer (62) and Chris Gorman (64) respectively, have substantial change-in-control agreements valued at over $35 million each, which could incentivize them towards a sale.

Key Decisions for Investors

• Investors could consider opportunistic positioning in Comerica and KeyCorp based on their potential as M&A targets, which may command acquisition premiums, especially given their lower price-to-tangible book values.
• Monitor closely any shifts in the regulatory landscape regarding bank mergers and acquisitions, as policy changes, particularly those related to the current administration's stance, could significantly alter the M&A prospects and valuations within the regional banking sector.
• Assess the fundamental strength and standalone strategic execution of Comerica and KeyCorp, including Comerica's management of its funding base post-Treasury agreement and KeyCorp's leverage of its fee-based businesses, as M&A outcomes are speculative and not guaranteed.
• The presence of lucrative change-in-control agreements for the CEOs of both banks warrants consideration, as these could influence their willingness to pursue a sale, potentially accelerating M&A timelines if the banks actively seek acquisition.