(The following statement was released by the rating agency)
CHICAGO, July 11 (Fitch) The U.S. banking industry is poised for
rise in M&A activity over the immediate term, mainly among
more-regional focused institutions, according to a new Fitch
This report provides a more comprehensive follow up to a Fitch
comment on bank
M&A published July 10.
Fitch believes there is a need for bank M&A activity based, in
increased cost structures for most banks, the growing economies
of scale that
will benefit larger institutions, and the desire to grow into
markets and lending products.
Furthermore, intense loan origination competition is currently
industry. An increase in acquisition activity will remove some
capacity, which Fitch views positively as too many banks are
chasing too few
Catalysts have begun to emerge that will bring an increase in
activity over the
intermediate term. These include:
--Higher stock market values, particularly for healthy
--Strategic focus on growing loans potentially via acquisition;
--Emphasis on mitigating potential interest rate risk;
--Belief that sufficient scale now matters more due to higher
--Fatigue on the part of bank management and boards at potential
From a credit perspective, Fitch's views on potential
focus on the level and depth of due diligence done by the
the acquirers knowledge of the target market, the pro forma
composition of the
loan and securities portfolios, the pro forma capital ratios of
entity, as well as the ability to integrate and realize
estimated cost savings
from potential transactions. Fitch also views prices paid for
terms and type of financing, strategic rationale, as well as
cultural fit of
some institutions as potentially affecting ratings.
The full report 'U.S. Bank Mergers and Acquisitions: When Will
Kick-In?' is available at 'www.fitchratings.com'.
Justin Fuller, CFA
Fitch Ratings, Inc.
70 West Madison
Chicago, IL 60602
Media Relations: Brian Bertsch, New York, Tel: +1 212-908-0549,
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: U.S. Bank Mergers and
When Will The Catalysts Kick In?
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