NEW YORK ( TheStreet) -- It looks like private equity is becoming more aggressive about pursuing acquisitions in the financial industry. Community Bancorp LLC's outbidding of Trustmark ( TRMK) for Cadence Financial ( CADE) is the most recent example.

Several small community and regional banks have been rumored to be targets of private equity investment or acquisitions. So we have compiled a list of banks that will likely be targets for investments by private equity. We selected the largest bank holding companies to post net losses for both the first and second quarters of 2010, leaving out Flagstar Bancorp ( FBC) and Pacific Capital Bancorp ( PCBC) because these companies have already received very significant capital infusions from private equity firms.

"This is a good list of banks. These are all banks that all have credit issues and need capital," Jones Day partner Chip MacDonald said of our top 10 acquisition targets.

"All of these franchises have attributes of good market share in good markets and that makes them potentially attractive to buyers," said Jeff Davis, a managing director with Guggenheim Partners LLC. "All of these could be sellers. M&A can be the icing on the cake, but investors should never buy a bank stock based on bank stock takeover valuation though."

What may be surprising to several investors, is that even though many of these banks are in need of capital, they are considered reasonably healthy. That is mostly because most private equity firms are looking for banks with depressed valuations that they can easily turn around.

"If you invest in a healthy bank or a relatively healthy bank that's the way to go," says Roman Regelman, a Partner with Booz & Company's Financial Services Practice. "You invest a little bit and you can build a platform."

That's exactly what Community Bancshares intends to do with Cadence. The bank-holding company, owned by former bankers, intends to make several investments in both failed and healthy banks.

Several of the banks on our list such as Synovus Financial ( SNV), United Community Banks ( UCBI) and Wilmington Trust ( WL) racked up big losses in their real estate loan portfolios and are also still participating in the Troubled Assets Relief Program, or TARP. "With the economy in neutral, there will be a ton of M&A activity, but it is not going to be like shooting fish in a barrel," says Davis. "There are several hurdles for transactions to clear."

Some of these challenges will be regulatory. Regulators cap any single PE firm at 24.9% investment in a bank, unless the PE firm becomes a bank holding company, putting under a much heavier regulatory burden. That's why there will be several smaller PE firms and consortiums investing in financial institutions.

"A common trend is that most of these investments are made by small PE firms established by former bankers," said Regelman. He added that regulations have kept many larger private equity firms away from investments in banks. "It's unlikely that you will see a TPG or Bain investing in a 24% stake in a bank," he said.

CBC is just one of several small PE firms interested in expanding their financial services investments. Warburg Pincus, Carlyle and Wilbur Ross have also made recent investments in banks.

Here are the top 10 banks likely to be targeted by private equity firms, by increasing asset size:

10. Banner Corporation

Company Profile

Shares of Banner Corporation ( BANR) of Walla Walla, Wash. closed at $1.89 Thursday, declining 29% year-to-date.

Income Statement

Banner announced last Wednesday that it expects to post a third-quarter net loss of between $43 million and $45 million, including a $24 million write-down of deferred tax assets. The net loss to common shareholders is expected to range between 38 and 42 cents a share. The company plans to release its third-quarter earnings results on Oct. 20.

Balance Sheet

Banner Corporation had $4.7 billion in total assets as of June 30. Nonperforming assets - including loans past due 90 days or more or in nonaccrual status and repossessed real estate - made up 5.99% of total assets, declining from 6.39% the previous quarter and 6.22% a year earlier. The annualized ratio of net charge-offs to average loans for the second quarter was 1.76%, compared to 1.45% the previous quarter and 3.47% in the second quarter of 2009. Loan loss reserves covered 2.63% as of June 30.

Banner owes $124 million in TARP money. The company raised $171 million through a common offering that was completed in June. As of June 30, Banner's Tier 1 leverage ratio was 13.02% and its total risk-based capital ratio was 17.12%, greatly exceeding the 5% and 10% required for most banks to be considered well-capitalized by regulators.

The regulatory ratios include the TARP money, of courses, but any way you slice it, Banner was strongly capitalized, as its tangible common equity ratio was 9.08% as of June 30 according to SNL Financial. This was the highest tangible common equity ratio among this group of 10 bank holding companies, although that could change after full results for the third quarter are released..

Stock Ratios

The shares trade for just 0.5 times tangible book value according to SNL Financial, so investors have already priced-in the coming third-quarter loss. Analysts don't expect the company to return to profitability until 2012. For that year, the consensus earnings estimate among analysts polled by Thomson Reuters is 10 cents a share.

Analyst Ratings

Out of six analysts covering the shares, three rate Banner Corporation a buy, while the other three recommend analysts hold the shares.

9. Pinnacle Financial Partners

Company Profile

Shares of Pinnacle Financial Partners ( PNFP) of Nashville, Tenn. Closed at $9.51 Thursday, down 33% year-to-date.

Income Statement

Pinnacle Financial reported a second-quarter net loss to common shareholders of $27.9 million, or 85 cents a share, following a loss of $5.4 million, or 16 cents a share, in the first quarter and a loss of $33.2 million, or $1.33 a share, in the second quarter of 2009. The decline in linked-quarter earnings performance reflected much higher credit losses, as the provision for loan losses in the second quarter was $30.5 million, rising from $13.2 million the previous quarter.

Pinnacle Financial plans to release its third-quarter earnings results on Oct. 19.

Balance Sheet

The company had $5 billion in total assets as of June 30, with a nonperforming assets ratio of 3.30%, rising from 3.11% in March and 2.34% a year earlier. The net charge-off ratio for the second quarter was 3.30%, compared to 1.71% in the first quarter and 5.02% in the second quarter of 2009. CEO M. Terry Turner said in Pinnacle Financial's second-quarter earnings release "nonperforming asset and charge-off levels will remain elevated for the next several quarters."

The company was well-capitalized as of June 30, with a tier 1 leverage ratio of 10.38% and a total risk-based capital ratio of 14.81%. Pinnacle Financial owes $95 million in TARP money and its tangible common equity ratio as of June 30 was 7.13% according to SNL Financial.

Stock Ratios

The shares trade for 0.9 times tangible book value according to SNL. The company is expected to return to profitability in 2012, with a consensus earnings estimate of 94 cents a share among analysts polled by Thomson Reuters. On that basis, the forward P/E is 10.1.

Analyst Ratings

Out of 13 analysts covering the shares, four rate Pinnacle Financial Partners a buy, while eight have hold ratings and one analyst recommends investors part with the shares.

8. United Community Banks

Company Profile

Shares of United Community Banks of Blairsville, Ga. closed at $2.39 Thursday, down 30% year-to-date.

Income Statement

For the second quarter, United Community Banks reported a net loss to common shareholders of $62.1 million, or 66 cents a share, following losses to common shareholders of $35.9 million, or 38 cents, the previous quarter and $18.6 million or 38 cents a share a year earlier. The larger second-quarter loss reflected $45 million in expenses from the sale of what CEO Jimmy Tallent called "$103 million of our most illiquid non-performing loans and foreclosed properties."

The company plans to release its third-quarter results on Oct. 28.

Balance Sheet

United Community had $7.7 billion in total assets as of June 30. The nonperforming assets ratio was 4.61%, improving from 5.48% the previous quarter and 5.26% a year earlier. The second-quarter net charge-off ratio was 4.87% and loan loss reserves covered 3.50% of total loans as of June 30 according to SNL Financial.

The company was well-capitalized with a Tier 1 leverage ratio of 7.72% and a total risk-based capital ratio of 13.85% as of June 30. United Community owes $180 million in TARP money and its tangible common equity ratio was 6.81% as of June 30, according to SNL.

Stock Ratios

The shares trade for 0.5 times tangible book value according to SNL. Analysts expect United Community to return to profitability in 2012, with a consensus earnings estimate of 33 cents a share among analysts polled by Thomson Reuters. On that basis, the forward P/E is 7.2.

Analyst Ratings

Out of nine analysts covering United Community Banks, three have buy ratings and six recommend investors hold the shares.

7. Doral Financial

Company Profile

Shares of Doral Financial ( DRL) of San Juan Puerto Rico closed at $1.59 Thursday, down 56% year-to-date.

Income Statement

Doral reported a second-quarter net loss to common shareholders of $235.7 million or $3.50 a share, compared to net income to common shareholders of $21.1 million, or 34 cents a share, the previous quarter and net income to common shareholders of $14.5 million, or 27 cents a share, a year earlier. The biggest factor in the second-quarter loss was a $137 million loss on the sale of $378 million in non-agency collateralized mortgage obligations. The company also took a $13 million charge to write-down $133 million in construction loans that were reclassified as held-for-sale.

Balance Sheet

Total assets were $9.3 billion as of June 30 and the nonperforming assets ratio was 10.04%, roughly the same as the previous quarter but rising from 8.93% a year earlier. The second-quarter net charge-off ratio was 3.99% and reserves covered 2.09% of total loans as of June 30.

Doral raised $171 million in common equity during the second quarter and is not a TARP participant. The company's tier 1 leverage ratio was 6.88% as of June 30 and its total risk-based capital ratio was 12.78%. The tangible common equity ratio was 4.44% according to SNL Financial.

Stock Ratios

The shares trade for 0.3 times tangible book value according to SNL. Among analysts polled by Thomson Reuters, the consensus is for the company to return to profitability in 2012, earning 27 cents a share. On that basis, the forward price-to-earnings ratio is 5.9.

Analyst Ratings

Out of five analysts covering Doral Financial, one has a buy rating, one a hold rating and three analysts recommend investors sell the shares.

6. Wilmington Trust

Company Profile

Shares of Wilmington Trust of Wilmington, Del. closed at $7.34 Thursday, down 40% year-to-date.

Income Statement

For the second quarter, Wilmington Trust reported a net loss to common shareholders of $120.9 million or $1.33 a share, following net losses to common shareholders of $33.8 million, or 44 cents a share, the previous quarter and $13.6 million, or 20 cents a share, in the second quarter of 2009.

The company said that "continuing economic pressures, particularly in southern Delaware" caused a significant decline in commercial real estate values. The company's provision for loan losses during the second quarter was $205.2 million, increasing from $77.4 million the previous quarter and $54 million a year earlier.

Balance Sheet

Wilmington Trust had $10.5 billion in total assets as of June 30 and the nonperforming assets ratio was 5.97%, increasing from 3.08% a year earlier. The second-quarter net charge-off ratio was 6.10%. Over the previous year, the company's highest net charge-off ratio was 1.54% in the second quarter of 2009. Loan loss reserves covered 4.42% of total loans as of June 30.

Wilmington raised $288 million in common equity during the first quarter. As of June 30, the company's tier 1 leverage ratio was 11.80% and its total risk-based capital ratio was 16.65%. The tangible common equity ratio was 7.28% according to SNL Financial. The company owes $300 million in TARP money.

Stock Ratios

The shares trade for 0.9 times tangible book value, according to SNL Financial. The consensus among analysts polled by Thomson Reuters is for the company to return to profitability in 2011, earning 8 cents a share. For 2012, the consensus earnings estimate is $1.31 a share. The forward P/E based on the 2102 consensus is 5.6.

Analyst Ratings

There have been numerous recent reports that Wilmington is looking to raise capital from private equity players and is considering a sale. The company has refused comment. Among the ten analysts covering the company, one has a buy rating, six have hold ratings and three recommend investors sell the shares.

5. Citizens Republic Bancorp

Company Profile

Shares of Citizens Republic Bancorp of Flint, Mich. closed at 94 cents Thursday, up 37% year-to-date.

Income Statement

Citizens Republic reported a second-quarter net loss to common shareholders of $44.7 million or 12 cents a share, improving net losses to common shareholders of $90.3 million or 23 cents a share the previous quarter and $352.6 million or $2.73 a share in the second quarter of 2009, which included a non-cash goodwill impairment charge.

The improvement in second-quarter results mainly resulted from a reduction in the provision for loan losses to $71.2 million from $101.4 million in the first quarter and $100 million a year earlier.

Citizens Republic plans to release third-quarter earnings results on Oct. 28.

Balance Sheet

Total assets were $10.8 billion as of June 30 and the nonperforming assets ratio was 4.10%. The net charge-off ratio for the second quarter was 3.83%, compared to 6.01% in the first quarter and 2.27% in the second quarter of 2009. Loan loss reserves covered 4.47% of total loans as of June 30. Citizens Republic owes $300 million in TARP money. The company's tier 1 leverage ratio was 8.72% and its total risk-based capital ratio was14.17% as of June 30. The tangible common equity ratio was 5.83% according to SNL Financial.

Stock Ratios

The shares trade for 0.6 times tangible book value according to SNL. The consensus among analysts polled by Thomson Reuters is for the company to return to profitability during 2012, with earnings of 13 cents a share. On that basis, the shares trade for 7.2 times forward earnings.

Analyst Ratings

Out of five analysts covering Citizens Republic, one has a buy rating and the other four recommend investors hold the shares.

4. Whitney Holding Corporation

Company Profile

Shares of Whitney Holding Corporation ( WTNY) of New Orleans closed at $8.51 Thursday, down 6% year-to-date.

Income Statement

The company reported a second-quarter net loss to common shareholders of $22.1 million or 23 cents a share, compared to a loss of $10.3 million or 11 cents a share the previous quarter and a net loss to common shareholders of $25.4 million or 38 cents a share a year earlier. \

The second-quarter provision for loan loss reserves was $59.3 million, increasing from $37.3 million in the first quarter but down from $72 million in the second quarter of 2009.

Whitney Holding Corp. plans to release third-quarter earnings results on Oct. 26.

Balance Sheet

Total assets were $11.4 billion as of June 30 and the nonperforming assets ratio was 4.84%, having risen steadily from 3.98% a year earlier. The second-quarter net charge-off ratio was 2.64%, up from 1.80% in the first quarter and 2.08% a year earlier. Loan loss reserves covered 2.87% of total loans as of June 30.

Whitney owes $300 million in TARP money and reported a tier 1 leverage ratio of 10.48% and a total risk-based capital ratio of 15.46% as of June 30. The tangible common equity ratio was 8.49% according to SNL Financial.

Stock Ratios

The shares trade for 0.9 times book value according to SNL Financial.

Analyst Ratings

Out of 13 analysts covering Whitney Holding Corp., three have buy ratings, eight recommend investors hold the shares and two recommend selling the shares.

3. First BanCorp

Company Profile

Shares of First BanCorp ( FBP) of San Juan, Puerto Rico closed at 29 cents Thursday, declining 87% year-to-date.

Income Statement

The company reported a net loss to common shareholders for the second quarter of $96.8 million or $1.05 a share, compared to a loss of $113.2 million or $1.22 a share in the first quarter, and a loss of $94.8 million or $1.03 a share a year earlier.

The second-quarter provision for loan losses was $146.8 million, declining from $171 million for the first quarter and $235.2 million in the second quarter of 2009.

Balance Sheet

Total assets were $18.1 billion as of June 30, with a nonperforming assets ratio of 9.78%, compared to 9.88% the previous quarter and 6.99% a year earlier. The second-quarter charge-off ratio was 3.44% and loan loss reserves covered 4.59% of nonperforming loans.

The company's tier 1 leverage ratio was 8.14% as of June 30 and its total risk-based capital ratio was 13.35%.

In July, First Bancorp exchanged the $400 million in preferred shares held by the Treasury for bailout money received via TARP for $424.2 million in mandatorily convertible preferred shares.

In August, the company converted $487 million in preferred shares to common shares at heavy discounts, resulting in gains which according to CEO Aurelio Alemán increased the company's tangible common equity ratio to a pro forma 5.22%, from the 2.57% reported as of June 30.

First BanCorp is also in the midst of another $500 million common stock offering, which has yet to be priced. The conversion of the Treasury's new convertible shares to common shares is set to take place after this offering is completed.

Stock Ratios

The shares trade for 0.1 times tangible book value according to SNL Financial.

Analyst Ratings

Out of six analysts covering First BanCorp, one has a buy rating, four have hold ratings and one recommends investors sell the shares.

2. Synovus Financial

Company Profile

Shares of Synovus Financial of Columbus, Ga. closed at $2.58 Thursday, rising 27% year-to-date.

On Thursday, Synovus announced that acting CEO Kessel Stelling was elected permanent CEO and President by the company's board of directors and that former CEO Richard Anthony, who had been on a medical leave of absence, would become the company's new Chairman.

Income Statement

Synovus reported a second-quarter net loss to common shareholders of $242.6 million or 36 cents a share, following a loss of $229.8 million or 47 cents a share in the first quarter and a loss of $601.2 million or $1.82 a share in the second quarter of 2009.

The provision for loan losses for the second quarter was $298.9 million, having declined four straight quarters from $631.5 million in the second quarter of 2009.

Synovus has scheduled its third-quarter earnings release for Oct. 25.

Balance Sheet

Total assets were $32.4 million as of June 30 and the nonperforming assets ratio was 4.90%, declining from 5.79% the previous quarter and 5.09% in June 2009. The net charge-off ratio for the second quarter was a high 7.15%. Loan loss reserves covered 3.55% of total loans as of June 30.

Synovus raised $1.1 billion in common equity during the second quarter, leaving it with a tier 1 leverage ratio of 10.12% and a total risk-based capital ratio of 16.91% as of June 30. The tangible common equity ratio was 7.58% according to SNL Financial. The company owes $968 million in TARP money.

Stock Ratios

The shares trade for 0.8 times tangible book value according to SNL.

Analyst Ratings

Out of 20 analysts covering Synovus Financial, four have buy ratings, 14 recommend holding the shares and two recommend investors sell the shares.

1. Marshall & Ilsley Corp.

Company Profile

Shares of Marshall & Ilsley ( MI) of Milwaukee closed at $7.33 Thursday, up 35% year-to-date.

Income Statement

For the second quarter, the company reported a net loss to common shareholders of $173.8 million or 33 cents a share compared to losses of $140.5 million or 27 cents a share in the first quarter and $234 million or 83 cents a share in the second quarter of 2009.

The better results in the first quarter included a $48.3 million gain on the sale of Marshal & Ilsley's merchant processing portfolio.

The second-quarter provision for loan losses was $439.9 million, declining from $458 million the previous quarter and $619 million a year earlier.

The company plans to release its third-quarter earnings results on Oct. 20.

Balance Sheet

Total assets were $54 billion as of June 30 and the nonperforming assets ratio was 4.18%, declining slowly but steadily from 4.67% a year earlier. The second-quarter net charge-off ratio was 4.16% and loan loss reserves covered 3.67% of total loans as of June 30.

Marshall & Ilsley owes $1.7 billion in TARP money. The company's Tier 1 leverage ratio was 9.12% and its total risk-based capital ratio was 14.35% as of June 30. The tangible common equity ratio was 8.19% according to SNL Financial.

Stock Ratios

The shares trade for 0.9 times tangible book value according to SNL Financial. The consensus among analysts polled by Thomson Reuters is for Marshall & Ilsley to return to profitability during 2011, earning three cents a share. Based on the consensus earnings estimate of 67 cents a share for 2012, the share trade at a forward price-to-earnings ratio of 10.9

Analyst Ratings

Out of 19 analysts covering Marshall & Ilsley, five rate have buy ratings, 12 rate the shares a hold and two analysts recommend investors sell the shares.

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-- Written by Maria Woehr in New York and Philip van Doorn in Jupiter, Fla.

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