NEW YORK (TheStreet) -- Prospective bank buyers are outweighing sellers, signaling that after a big lull in U.S. bank M&A last year, the market may revive in 2012.
In an update to its list of potential bank buyers and sellers, bank research firm KBW now counts 53 potential bank acquirers, far outweighing the 22 potential sellers that it's identified and an additional 13 banks that could either look for a deal or a sale in 2012. While the update provides four new banks to consider as consolidation targets, it also signals a possible uptick in bank consolidation on the heels of a significant $1.5 billion Monday deal.
In a Mar. 12 report KBW analyst Christopher McGratty highlights 4 new banks that could potentially look at a sale, including Alliance Financial (ALNC), First Defiance Financial (FDEF), OmniAmerican Bancorp (OABC) and Texas Capital Bancshares (TCBI).
In addition McGratty removed BankUnited (BKU) from his buyers list and added it to a list of 13 potential bank buyers who could become sellers. New addition also include Cardinal Financial (CFNL) and Heritage Commerce (HTBK).The Sellers Alliance Financial Alliance Financial currently trades at a price to 2013 earnings per share valuation of 12.3x, while it is valued at 1.4x its tangible book value. KBW currently holds out a $30 a share price target and a "market perform" rating for the Syracuse, N.Y.-based lender. Alliance Financial also has a tangible common equity of 7.7% relative to its total asset. First Defiance Financial Another new sale candidate First Defiance Financial currently trades at a price to 2013 earnings per share valuation of just 8.7x and a stock price that reflects a discount to the bank's tangible book value. KBW analysts rate First Defiance Financial a "outperform" rating on the bank's 0.9x tangible book valuation and its tangible common equity to total asset ratio of 8.7%. They give shares of the Defiance, OH-based bank a $19 price target, a near 20% premium to current trading prices. OmniAmerican Bancorp New KBW prospective bank seller OmniAmerican Bancorp may look to sell itself a t a premium valuation that reflects the Baltimore-based lenders brightening prospects after a 2010 initial public offering. Since its IPO, OmniAmerican shares have surged over 60%, significantly outperforming bank peers. Even a t a current valuation of 24.7x expected 2013 earnings per share and a 1x price to tangible book value, KBW analysts give shares an "outperform" rating and a price target of $23.00, an over 20% premium to current trading prices. Texas Capital Bancshares At a market cap of $1.3 billion Texas Capital Bancshares is KBW's largest cap new addition to its potential sellers list. The Dallas based bank currently trades at 13.8x KBW's forecast 2013 earnings per share and a price to tangible book value of 2.2x, warranting a "market perform" rating and a $33 a share price target from KBW that's a discount to current trading prices over $34. Overall KBW analyst McGratty added 12 potential buyers to his bank M&A watch list, four potential sellers and just 3 potential buyers who could become sellers. Meanwhile, McGratty removed 4 possible bank buyers and two potential sellers. It's a signal that after a slow period in industry consolidation, a shortage of sellers might pull buyers into the market. A 2012 rally in the bank sector and a surplus of banks owned by private equity investors may be an added headwind for deals in the coming year, to recover from the slowest year in U.S. bank mergers in three decades, according to Thomson Reuters data. The Financial Select Sector SPDR (XLF) is up over 14% year-to-date, more than doubling the 6% return of the Dow Jones Industrial Average in 2012.
For more on bank M&A, see why bank deals are proving to be profitable. For more on bank investing and the upcoming March stress tests, see 4 banks ready for outsized dividend payments.
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