) -- There have been plenty of large M&A deals announced this year, but none of them in banking.

The largest U.S. banks have to be very selective when considering acquisitions because of the difficult regulatory and political environment. The outcry against "too big to fail" banks seems stronger than ever, as evidenced by the sponsorship of the Terminating Bailouts for Taxpayer Fairness Act by Senators Sherrod Brown (D., Ohio) and David Vitter (R., La.), which would force "megabanks" with total assets of over $500 billion raise large amounts of additional capital or break up their business to maintain Tier 1 common equity ratios of 15% of total assets.

The Brown-Vitter bill would walk away from the Basel III agreement on international capital standards for banks, and also from enhanced capital requirement of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. While it has little chance of passing, Dodd-Vitter illustrates how unlikely we are to see any of the "big six" U.S. banks, including

JPMorgan Chase

(JPM) - Get Report


Bank of America

(BAC) - Get Report



(C) - Get Report


Wells Fargo

(WFC) - Get Report


Goldman Sachs

(GS) - Get Report


Morgan Stanley

(MS) - Get Report

, greatly expand through an acquisition.

The drawn out saga of the

Capital One's

(COF) - Get Report

purchase of ING Direct (USA) and



U.S. credit card portfolio illustrate how difficult it can be for a large U.S. bank to get a deal done, following the credit crisis and under Dodd-Frank. Capital One announced the ING Direct (USA) deal in June 2011 and the HSBC credit card deal in August 2011. Following delayed approvals by the

Federal Reserve

and the Office of the Comptroller of the Currency, following an outcry against the acquisitions by "consumer advocates," the ING deal was completed in February 2012 and the HSBC card deal was closed in May 2012.

Also see: Bank of America: Mortgage Overhang Removal Winner >>

Still, the big banks could be looking at additional opportunities to grow earnings through acquisitions of a relatively modest size. Bank of America Merrill Lynch analyst Erika Penala said in a note to clients on Tuesday that bidders on the potential sale of

General Electric's

(GE) - Get Report

$31 billion portfolio of private label credit card loans could include Citigroup, Wells Fargo,

U.S. Bancorp

(USB) - Get Report


TD Bank

(TD) - Get Report


According to Penala, the "most logical buyer" for GE's private label card portfolio could be Citigroup. "At a 5% premium, a deal for

the GE portfolio would be 10% accretive to EPS, and we estimate that C could rebuild Basel 3 capital back to 9.9% by 4Q13," Penala wrote. Then again, the analyst added that Citigroup "is highly sensitive to creating new intangibles, and we think it is unlikely C would bid a significant premium -- if any."

Potential Buyers

KBW analyst Frank Barlow in a note to clients on Tuesday said that banking industry M&A volume is "disappointing given the increased chatter about M&A we heard about at our February bank conference."

Also see: Citi Should Buy GE's $31B Private Card Portfolio: BofA Merrill Lynch >>

Based on comments from executives during earnings conference calls, while leaving out neutral on-the-fence comments, "larger buyers appear more hesitant about M&A than their smaller counterparts," according to Barlow. "The median buyer with negative commentary is $10.5B in size versus $5.3B for those with positive commentary (excluding the large regionals)," he wrote.

KBW maintains lists of potential buyers and sellers among regional banks. The firm on Tuesday updated the potential buyers list to include five large regional banks, although the three that discussed potential deals during their conference calls "were negative about their near-term M&A prospects," according to Barlow. The five large regional banks now on KBW's list of potential buyers include


(CMA) - Get Report

of Dallas,

Fifth Third Bancorp

(FITB) - Get Report

of Cincinnati,

M&T Bank

(MTB) - Get Report

of Buffalo, N.Y.,

U.S. Bancorp

(USB) - Get Report

of Minneapolis and


(BBT) - Get Report

of Winston-Salem, N.C.

Following the completion of the Federal Reserve's stress tests in March, the regulator announced that BB&T would be required to file a revised 2013 capital plan by the end of the third quarter, since its original plan was rejected "based on "a qualitative assessment."

Also see: 10 Cheapest Bank Stocks to Forward Earnings >>

M&T is working to complete its pending acquisition of

Hudson City Bancorp


, which was announced last August. M&T announced in April that the Federal Reserve had "identified certain regulatory concerns with M&T's procedures, systems and processes relating to M&T's Bank Secrecy Act and anti-money-laundering compliance program," which would delay approval of the Hudson City deal. M&T and Hudson City extended "the date after which either party may elect to terminate the merger agreement if the merger has not yet been completed," to Jan. 31, 2014, but the two companies also said there were "no assurances" the deal would be completed. Shareholders of both companies approved the merger.

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) - Get Report 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) - Get Report 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) - Get Report 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 itsfirst 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.

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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.