) -- After making big returns investing in distressed banks during the financial crisis, private equity giants like

The Carlyle Group

(CG) - Get Carlyle Group L.P. Report


TPG Capital

may be looking to exit amid a revival in sector M&A.

But stock investors beware, there's little reason to bank on big takeover premiums.

Recent analysis by research firm KBW highlights that as bank M&A heats up, private equity players who bought or took big stakes in distressed banks during the financial crisis may be active sellers as they lock in returns for limited partners.

KBW notes that trading a basket of bank stocks they highlight as takeout candidates has been a winning proposition for many private equity investors. The basket of 27 private equity backed banks KBW outlined -- and a separate list of banks it highlights as potential sellers -- have both risen roughly 30% in 2012, double overall sector returns.

"We are beginning to see signs that the much anticipated M&A wave is gaining momentum," writes KBW analyst Christopher McGratty in a Sept. 25 note to clients. "

Many bank private equity investments that were made during the financial crisis are now at or past the mid-point of a typical 3-5 year investment horizon, suggesting to us that PE-led liquidity events may garner more attention as the M&A environment accelerates," McGratty noted.

But as M&A expectations firm up and private equity investors hit the exits, investors should temper their expectations on big returns. Of the 27 banks in KBW's basket of private-equity backed banks, the firm only rates three 'outperform," according to the analysis.

In fact, the Wednesday $506 million acquisition of

West Coast Bancorp

( WCBO) by

Columbia Banking System

(COLB) - Get Columbia Banking System, Inc. Report

-- one of the three outperforms in KBW's basket -- underscores the firm's thesis, but gives investors reason for caution. In the deal, Columbia Banking System is only paying a 10%-plus premium for West Coast Bancorp, a take under deeply below the bank's pre-crisis trading highs.

Although, private equity investors are in the business of buying low and selling high, absolute investment returns on those investments often in excess of 100% may mean small takeout premiums to current market prices could suffice for sellers.

Meanwhile, a string of recent bank mergers highlighted by

M&T Bancorp's

(MTB) - Get M&T Bank Corporation (MTB) Report

$3.8 billion acquisition of

Hudson City

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( CRBC) near $1 billion deal to buy

Citizens Republic Bancorp

( CRBC) are notable because they show a trend of financial sector consolidation may not net shareholders big takeover premiums. Both deals also came at relatively small premiums and far below share highs prior to the crisis.

For bank investors looking to catch a bid on a sector-wide consolidation, KBW highlights TPG Capital backed


(EVER) - Get EverQuote, Inc. Class A Report

and Carlyle backed

Boston Private

( CRBC) as potential sellers with an outperform rating.

KBW gives market perform ratings to Wilbur Ross, Carlyle and Blackstone-backed


(BKU) - Get BankUnited, Inc. Report


First Republic Bank

(FRC) - Get First Republic Bank Report

-- carved out of Bank of America in a management buyout - but highlights both banks as possible sellers over the long term.

As with West Coast Bancorp, private equity investors in BankUnited and First Republic Bank have already netted investment returns of 100%, in successful crisis-time investments. Investors trying to catch a M&A tailwind should expect much less.

For more on private equity deals, see why Goldman Sachs is cutting its private equity future

by half

. Also see why a dividend is key to Carlyle Group's

stock strength


-- Written by Antoine Gara in New York