) -- A prominent bank analyst downgraded

Huntington Bancshares

(HBAN) - Get Report


Synovus Financial

(SNV) - Get Report

saying that Huntington was fully valued and that the upside for Synovus in a takeout scenario is "more modest than current investor sentiment believes."

Shares of Huntington were down 2% to $7.42 and Synovus was down 3% to $2.80 in afternoon trading.

Bank of America

(BAC) - Get Report

analyst L. Erika Penala said in a report that "the banking industry is in the early stages of a material consolidation cycle," and although "takeout potential should be a factor for consideration in stock selection," her group's analysis "suggests that actual upside in a deal (11% at median) is more modest than current investor sentiment believes."

The downgrade of Synovus was particularly harsh, going straight from a buy to "underperform," or sell, saying that the shares "already appear to be fully reflecting potential takeover value," along with

Associated Banc-Corp



Bank of Hawaii

(BOH) - Get Report


According to Penala's analysis, Synovus's takeout price would be $2.62, or a 9% discount to Wednesday's closing price of $2.89, while the takeout price for Associated Banc-Corp would be $14.02, or a 6% discount to Wednesday's closing price of $14.88. For Bank of Hawaii, the takeout price listed in the report was Wednesday's closing price of $47.57.

While Penala suggested that Huntington Bancshares would command a 13% premium in a takeout scenario, the shares were downgraded because "HBAN screens as one of the least probable takeout candidates" among banks covered by Penala, and is fairly valued "from a standalone EPS power perspective."

Other bank holding companies that would cost potential acquirers a premium according to the report include

First Horizon National

(FHN) - Get Report

, which Penala said would go for a 33% premium and

Zions Bancorporation

(ZION) - Get Report

, which would command a 15% premium.


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.