Novantas Says "Smart Mergers" Will Stress Revenue Growth in Report for Consumer Bankers Association

June 11 , 2006

NEW YORK - The winners in the next round of banking consolidation will emphasize regional responsiveness as a path to revenue growth in mergers and acquisitions, said Novantas LLC in a report published by the Consumer Bankers Association.

In "Smart Mergers," Novantas said decades of consolidation have cut the potential for further merger-driven efficiency gains, increasing the need for branch-generated growth. This "can only be achieved by identifying and then responding to the distinct conditions of each major market," said Dave Kaytes, a Managing Director.

Kaytes said each retail branch banking company represents a portfolio of regional assets, with some local branch clusters outperforming their markets while others lag. Since conditions "vary dramatically among the hundreds of major local markets in the United States, we need to evaluate the 'market portfolio' for each institution to understand the bank's potential as either an acquirer or a target," he said.

Novantas identified five key analyses that each bank should conduct in order to determine its optimal merger strategy: 1) Determine the growth and competitive characteristics of each market being served; 2) Measure bank performance against the potential of each market; 3) Develop a roadmap on how to capitalize on the branch presence in each market; 4) Establish market-by-market objectives for M&A strategy; and 5) Integrate the opportunities into a program for optimal performance.

The report is part of The Defining Difference, a research series created exclusively for the CBA. Each quarterly report will delve into a particular aspect of targeted retail banking, detailing the business issues that executives face, providing specific recommendations on how to respond, and discussing the organizational implications.

The Consumer Banker's Association is the recognized voice on retail banking issues in the nation's capitol. CBA members collectively hold two-thirds of the industry's total assets, and include most of the nation's largest bank holding companies, as well as regional and super-community banks.

Novantas is the acknowledged leader in customer science and revenue strategy in the financial services industry. The Firm specializes in investigating and interpreting customer needs, attitudes and behaviors in ways that help companies to refine marketing decisions, customer strategies, and sales and service activities.