Trying to pinpoint the next acquisition target in the banking sector is something of a sport on Wall Street and on Wednesday two investment banking companies weighed in with their choices.
Mark Morgan, an analyst at Rochdale Securities LLC, predicted in his report that there will be more bank consolidation next year once it becomes apparent that the Federal Reserve is poised to stop raising interest rates. "Better valuations among the larger banks should put them in a better position to deploy capital more profitably into acquisitions," he wrote.
Mr. Morgan included an updated list of 17 companies he believes might draw interest because they are in attractive markets, have low valuations, and perform well.
His picks included two companies that regularly appear on these lineups, BankUnited Financial Corp. of Coral Gables, Fla., and CVB Financial Corp. of Ontario, Calif. Both have been identified as targets by Keefe, Bruyette & Woods Inc. in the past, though KBW dropped BankUnited from its most recent list, issued Nov. 18, while it kept CVB Financial.
The SunTrust Robinson Humphrey list published Wednesday said Fidelity Bankshares Inc. of West Palm Beach, Fla., Fidelity Southern Corp. of Atlanta, and Prosperity Bancshares Inc. of Houston will probably be sold in the next couple of years.
Fidelity Bankshares has also made KBW's roster in the past. In a research note, SunTrust said all three companies have estimated takeover prices that are lower than those of recent deals in their states; SunTrust further noted that Fidelity Bankshares' top executives are nearing retirement age.
Rochdale's list also included North Fork Bancorp. Inc. of Melville, N.Y.; New York Community Bancorp Inc. of Westbury; Webster Financial Corp. of Waterbury, Conn.; TCF Financial Corp. of Wayzata, Minn.; and City National Corp. of Los Angeles.
BankUnited appears to be a reluctant regular on such lists. In an interview last week, Alfred R. Camner, the $10.7 billion-asset company's chairman and chief executive, said he is not interested in buying or selling. There is opportunity in Florida to build organically, he said.
CVB's president and CEO, Linn Wiley, 67, said his company also plans to remain independent.
"We have a very strong executive team in place," Mr. Wiley said Wednesday. CVB has a deep bench of talent from which to choose his successor, he added.
Though North Fork was not on SunTrust's list, SunTrust analyst Andy Borrmann said its "footprint has got to be one of the more valuable ones in New York" and that it "will hit the wall at some point." A sale at some point is the best option for shareholders and management, Mr. Borrmann added.
John A. Kanas, North Fork's chairman, chief executive, and president, said Wednesday: "Right now our margins have stabilized and we believe that earnings momentum will turn upwards later next year, and so it's probably a silly time to think about selling the company."
A spokesman for Webster Financial said it is "highly confident" in its ability to execute on its strategic plan for growth. Richard D. Aldred, Fidelity Bankshares' chief financial officer, said the Florida company is "probably in the most desirable part of the country for banking and we understand that a lot of people covet it. We will always do the right thing for the stockholder." He would not comment further.
Representatives from New York Community, BankUnited, City National, and Prosperity Bancshares did not return phone calls Wednesday. TCF Financial declined to comment, and Fidelity Southern said executives were not available to comment.
