UPDATE 1-US regionals lead bank shares on merger hopes

* U.S. regional bank deals buoy investors

* Regions up 7 pct, SunTrust up nearly 5 pct

* Larger banks also rally with recovery hopes
(Adds analysts, background on regional bank consolidation,
larger banks, byline; updates shares)

By Maria Aspan

NEW YORK, Dec 22 (BestGrowthStock) – Shares of U.S. regional banks
Regions Financial Corp (RF.N: ) and SunTrust Banks Inc (STI.N: )
rose on Wednesday, leading bank shares broadly higher, after a
merger announcement boosted investor hopes for bank industry
consolidation.

Shares of Regions were up 7 percent to $6.91 and SunTrust
shares rose 4.7 percent to $29.17 in early Wednesday afternoon
trading, after Hancock Holding Co (HBHC.O: ) agreed to buy
Whitney Holding Corp (WTNY.O: ) for a 42 percent premium.
[ID:nSGE6BL0AM]

The deal was the second announced takeover of a U.S.
regional bank in less than a week. Bank of Montreal (BMO.TO: )
said last Friday it would buy troubled Wisconsin lender
Marshall & Ilsley Corp (MI.N: ) for a 34 percent premium.
[ID:nN1744360]

“The Whitney-Hancock merger, on top of the BMO-M&I merger,
is confirming in most people’s minds that the consolidation of
the industry has now begun again after a two-year, three-year
hiatus,” said Rochdale Securities analyst Richard Bove.

The run-up in Regions and SunTrust shares shows that
“investors are taking a wild shot assuming that these two
companies will be taken over, and I think that they will be
also,” Bove said.

Shares of Zions Bancorp (ZION.O: ), Huntington Bancshares Inc
(HBAN.O: ), KeyCorp (KEY.N: ) and Fifth Third Bancorp (FITB.O: ) also
rose, as investor consolidation hopes highlighted a year-long
recovery among U.S. regional banks. [ID:nN20192853]

“Traditional M&A seems to be coming back a little more
quickly than people had thought, and the premiums are
substantial as well. That creates a little froth in the market
and helps create expectations for more deals,” said Sandler
O’Neill managing director R. Scott Siefers.

Optimism about the banking M&A environment also brightened
investors’ general outlook about the economy and the industry’s
recovery from the financial crisis, analysts said. Shares of
the nation’s two largest banks — Bank of America Corp (BAC.N: )
and JPMorgan Chase & Co (JPM.N: ) — rose over 3 percent each on
Wednesday.

“Banks are willing to come in and purchase other banks —
it’s showing that if the acquirers were really still spooked
about the economy and financial stability, you’d think they
would be reluctant to go out and make these type of
acquisitions,” said Marty Mosby, bank analyst at boutique bank
Guggenheim Partners.

“But if they’re willing to go out and start paying more for
the acquisitions … they don’t anticipate there to be another
wave of losses,” he said. “It has a positive implication
across the industry.”
(Reporting by Maria Aspan; Editing by Tim Dobbyn)

UPDATE 1-US regionals lead bank shares on merger hopes