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Kroll: Purchase of Wells Fargo branches 'strategically compelling' for Flagstar

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Kroll: Purchase of Wells Fargo branches 'strategically compelling' for Flagstar

Kroll Bond Rating Agency views Troy, Mich.-based Flagstar Bancorp Inc.'s proposed branch and deposit acquisition of Wells Fargo & Co. as "strategically compelling, with limited potential downside compared to many transactions."

The rating agency said that in conjunction with Flagstar Bancorp's recently completed purchase of Desert Community Bank's branches, the proposed Wells Fargo branch acquisition would drive significant branch network expansion in a relatively short time period, creating funding flexibility and continuous growth in Flagstar Bancorp's balance sheet going forward.

The new deposits would allow Flagstar Bancorp to quickly pay down federal home loan bank borrowings, the rating agency added.

Flagstar Bancorp's capital levels should remain solid in the context of its risk profile at the closing of the proposed branch and deposit acquisition, with the potential capital required to complete the transaction achieved through a mix of retained earnings and active balance sheet management, Kroll said.