This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

4 Banks Ready to Sell Out

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 - Get Report), OmniAmerican Bancorp (OABC) and Texas Capital Bancshares (TCBI - Get Report).

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.

Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

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.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
PCBC $6.35 -1.55%
FDEF $41.05 0.27%
OABC $26.17 1.20%
TCBI $59.85 -0.30%
AAPL $118.03 -0.71%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs