- KBRA views the proposed Wells Fargo Bank, N.A. branch and deposit acquisition favorably for Flagstar Bancorp, Inc.’s (NYSE: FBC) creditors. In KBRA’s view, this purchase is strategically compelling, with limited potential downside compared to many transactions.
- In conjunction with the recently completed DCB branch acquisition, the proposed Wells Fargo branch acquisition would propel significant branch network expansion in a relatively short timeframe and create notable funding flexibility to continue to grow the balance sheet going forward.
- In terms of funding base impact, the acquisition of these low cost, low beta deposits would allow FBC to immediately pay down FHLB borrowings as well as reduce rate sensitivity on the funding side. The substantial impact the acquired deposits will have on FBC’s funding costs, in KBRA’s view, justify the moderately elevated premium paid.
- KBRA expects that FBC’s capital levels will continue to be solid in the context of its risk profile at close, with potential capital required to complete the deal achieved through a blend of retained earnings and active balance sheet management.
Ratings are based on KBRA’s Global Bank and Bank Holding Company Rating Methodology, published on February 19, 2016. The ratings and supporting rationale are available at www.kbra.com.
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KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.