KEY POINTS
  • Comerica, Zions and First Horizon might ultimately be acquired by more profitable competitors, according to KBW.
  • Larger banks with strong returns including Huntington, Fifth Third, M&T and Regions Financial are positioned to grow through taking over smaller lenders.
  • Two other lenders, Western Alliance and Webster Financial, could also consider selling themselves, KBW analysts said.

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An automatic teller machine (ATM) at the Zions Bank headquarters in Salt Lake City, Utah, US, on Monday, July 10, 2023.

A trio of regional banks faces increasing pressure on returns and profitability that makes them potential targets for acquisition by a larger rival, according to KBW analysts.

Banks with between $80 billion and $120 billion in assets are in a tough spot, says Christopher McGratty of KBW. That's because this group has the lowest structural returns among banks with at least $10 billion in assets, putting them in the position of needing to grow larger to help pay for coming regulations — or struggling for years.

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