Examples include First Niagara Financial Corp.'s $1.5 billion offer in August for NewAlliance Bancshares Inc., Miller said. The biggest takeover of an open U.S. commercial bank since 2008 will lift Buffalo-based First Niagara into the ranks of the nation's 25 biggest lenders, according to the company. Both First Niagara and NewAlliance, based in New Haven, Connecticut, were on KBW's list of buyers.
Pacing
The pace of consolidation will quicken if the economy, loan demand, and interest rates fail to rebound, analysts said. When borrowers repay loans, banks have nowhere to put the cash except lower-yielding securities.
"That pressure is going to continue to mount into 2011," and push banks into deals, said analyst David Hendler of CreditSights in New York.
Bank loans in the U.S. fell $869 billion to $8.24 trillion from October 2008 through early August, according to Goldman Sachs. The decline is more than twice the 4 percent slide in 2001. At U.S. Bancorp, average loans grew in the second quarter by 4 percent annually. Without acquisitions, they would have dropped 2.7 percent.
In that kind of environment, where demand for what banks do is sinking, "the only way you are going to grow assets is to buy another bank," Miller said.