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5 Bank Takeout Targets, Up to 26% Upside: KBW

So neither BB&T nor M&T are likely to announce a deal in the near term.

Potential Sellers

Here are the five regional banks on KBW's Potential Sellers List rated "outperform" with the most upside potential, based on the firm's price targets:
  • Yadkin Valley Financial(YAVY) of Elkin, N.C. The company's shares closed at $3.98 Monday and KBW's price target is $5.00 for upside potential of 26%. KBW analyst Brady Gailey in a note to clients on April 20 wrote "there could be meaningful upside to this target price if YAVY were to explore alternatives, including a sale of the company," adding that "there would be decent interest of multiple buyers."
  • Flushing Financial(FFIC) of Lake Success, N.Y. The shares closed at $15.49 Monday and KBW's price is $19.00. Following the company's first-quarter earnings announcement, KBW analyst Brian Kleinhanzl wrote in a note that "FFIC is still continuing along a slow transformation to a more commercial-like bank and the patient investor will be rewarded owning the shares at the current price and valuation."
  • Synovus Financial(SNV) of Columbus, Ga. The shares closed at $2.74 Monday and KBW's price target is $3.25. Synovus is a survival story, with the company dealing with the credit crisis aftermath by rolling over 30 separate bank charters into one and eventually becoming profitable enough to recapture nearly all of its $800 million deferred tax asset valuation allowance (DTA) during the fourth quarter. The company still owes $967.8 million in federal bailout funds received in December 2008 through the Troubled Assets Relief Program, or TAR. In a note to clients on April 24, KBW analyst Jefferson Harralson wrote that "in the near term, if SNV is able to repay TARP with no common raise (something we believe is now a probability), it could help move the shares higher, and potentially help it break out of its range-bound trek."
  • United Community Banks(UCBI) of Blairsville, Ga. The shares closed at $10.98 Monday and KBW's price target is $13.00. Harralson wrote in a note on April 29 that although the bank is a potential seller, "we believe its first priority is to improve earnings in order to maintain independence."
  • Metrocorp Bancshares(MCBI) of Houston. The shares closed at $10.25 Tuesday and KBW's price target is $11.75. KBW said in the M&A report on Tuesday it sees "significant franchise value for the largest Chinese Ethnic bank in Texas w/California operations."

-- Written by Philip van Doorn in Jupiter, Fla.

>Contact by Email.

Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla. and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.
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