Story updated with information on the M&I acquisition.
NEW YORK(TheStreet)-- Bank M&A is picking up, especially among regional players, and the next year could bring a slew of new deals that will push share prices in many directions.
The recent acquisitions of Marshall & Ilsley Corporation (MI) by Bank of Montreal (BMO) and Wilmington Trust's (WL) purchase by M&T Bank (MTB) are just a couple of examples of the type of deal to come. Many industry professionals agree that the transactions will act as a catalyst, prompting more mergers in the financial industry. "That regional acquisition is probably a start of the consolidation in the industry and it was probably the right thing for both M&T and Wilmington Trust," said Scott Fainor, CEO of National Penn Bancshares (NPBC).
"When it comes to acquisitions in finance right now you have the premium takeouts like the First Niagara (FNFG), NewAlliance Bancshares (NAL) deal, and then we are seeing transactions like Wilmington which had more problems than people anticipated it would have," said Fred Cannon an analyst at Keefe, Bruyette & Woods.Cannon says to expect more of the transactions similar to Wilmington Trust after year-end results as credit continues to deteriorate and banks struggle to meet capital requirements. He adds that impaired credit issues could put Keycorp (KEY) in play as well as Synovus (SNV). "I would guess we would see a lot more strategic acquisitions of a lot of very small banks such as Central Pacific (CPF) and National Penn," Cannon said. Even though these institutions have received investments from private equity that won't keep these institutions from being acquired, Cannon explained. "Private equity investments could actually encourage a sale, in my opinion," Cannon added. "When opportunities confront us on the M&A front, we will take advantage of any of those opportunities to grow through acquisitions and take advantage of any consolidation that might play out in our market," National Penn's Fainor said in an interview. KBW's Cannon and Rochdale Securities analyst Richard Bove have been speculating on which institutions may be the next targets to get gobbled up by larger banks. Here's a list of the banks that are likely already being targeted by larger banks, beginning with two smaller holding companies that are in play from the actions of private equity investors, and then moving up by asset size:
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