M&T Bank's (MTB) $3.7 billion deal to buy Hudson City (HCBK) has reenergized speculation about bank mergers and acquisitions.

Their agreement, the largest whole-bank deal of the year, has raised expectations that more dominoes will fall, especially among large community banks.

Here are five banks that could be next, according to analysts and investment bankers.

Astoria Financial (AF), $17.8 billion of assets, Lake Success, N.Y.
The M&T/Hudson City deal shined the takeover spotlight on this Long Island thrift in a big way.

Astoria is in a bind similar to Hudson City's:They are both very large thrifts struggling to make money in the face of dismally low interest rates and weak housing demand. Astoria — like Hudson — has hoped diversification would solve its financial woes, which include shares that trade at just 90% of tangible book and a 0.30% return on assets in the most recent quarter.

The 82-branch Astoria is surrounded by a stable of able acquirers that are eager to expand. It is hoping to fend them off by taking a bigger slice of the New York area commercial real estate market, one of the most brutally competitive CRE markets in the country.

Hudson City decided it was better off doing a stock-based deal than it would be spending years investing in the new products and people necessary to evolve into a different kind of bank.

Calls to an Astoria official Tuesday were not returned.

Texas Capital Bancshares (TCBI), $9.14 billion of assets, Dallas
Three factors put a target on Texas Capital's back.

It is one of the few big, independent banks in one of the strongest economic areas — and hottest M&A market — in the country. It has an aging management team in Chief Executive George Jones Jr. and Chairman James Holland Jr., who are both over 65. And it reportedly explored selling about two years ago but found the bids wanting.

Texas Capital is the kind of bank that M&A experts often say will be sold, not bought. It has a quirky but lucrative model that is focused on business banking. It has surprisingly few branches for an institution its size, with just a dozen banking locations in the states' five big cities. So its people are its moneymaker, which makes it a somewhat risky takeover target. If its culture did not mesh with the buyer's and its people opted to leave, they could take their clients with them — and the acquirer ends up overpaying for a dozen branches in Dallas, Houston, Austin and elsewhere.

Texas had a return on assets of 1.40% in the second quarter, and it trades at a multiple of more than 260% of its tangible book value. That lofty share price would make it hard for an acquirer to pay a premium, given that a bank has not changed hands at a price of more than 250% tangible book since the financial crisis.

Comerica (CMA), BB&T (BBT), Prosperity Bancshares (PB), Cadence Bancorp and other institutions that might be natural buyers for Texas Capital are either busy with recent acquisitions or pointedly opposed to striking pricey deals.

A spokeswoman for Texas Capital declined to comment.

BancorpSouth (BXS), $13.8 billion of assets, Tupelo, Miss.
Count this 260-branch lender as another member of the club of attractive, sizable banks with aging management.

It, too, is surrounded by several healthy community and regional bank acquirers angling to strengthen their standing across the South. They include Iberiabank (IBKC), Hancock Holding (HBHC) and Trustmark (TRMK). BancorpSouth's chairman and CEO, Aubrey Patterson, 69, has said the company wants to stay independent. But if he seeks an exit, BancorpSouth has logical suitors and financial profile to make it happen.

Its return on average assets was a respectable 0.64% in the most recent quarter, and it currently trades at a reasonable 123% of its tangible book value. Its tangible book value was $1.13 billion at the end of the second quarter.

A buyer could pay a small premium for its shares should the acquirer be able to handle paying a fair market price of around 150%, which healthy banks in good markets have been fetching lately.

BancorpSouth does not comment on M&A speculation, a spokesman said.

First Commonwealth Financial (FCF) $5.9 billion of assets in Indiana, Pa.
First Commonwealth has several attributes that could make it vulnerable to an investor-activist squeeze to seek a buyer, experts say.

It operates in a burgeoning M&A market. The 162% of tangible book that WesBanco (WSBC) agreed to pay for the 13-branch Fidelity Bancorp of Pittsburgh illustrates a strengthening demand for Pennsylvania banks.

First Commonwealth has a bigger presence, higher profits and fewer problem loans than Fidelity. It is one of the last sizable, independent institutions in the region, operating 112 branches.

Its shares trade at an inviting price of 120% of tangible book, and the company has had a management changeover. When John Dolan retired as CEO in December, the board spent three months searching for a replacement before ultimately giving the top job to former First Commonwealth Bank President T. Michael Price, who served as interim CEO during the search. That raises questions about whether Price is a true successor or just someone to steer the ship until a buyer comes along.

Pennsylvania is thick with potential buyers. Among them are S&T Bancorp (STBA), National Penn Bancshares (NPBC), F.N.B. (FNB) and Huntington Bancshares (HBAN).

First Commonwealth did not comment.

OceanFirst Financial (OCFC), $2.3 billion assets, Toms River, N.J.
Recent management issues have drawn attention to OceanFirst, a profitable bank with 24 branches along the coast of central New Jersey. In August, the company announced the resignation of President and Chief Operating Officer Vito R. Nardelli, pegged by market watchers as the likely heir apparent to CEO John Garbarino, who is 62 and has served as OceanFirst's CEO since 1995.

OceanFirst has never successfully closed a whole-bank deal, which raises questions about its ability to be an acquirer should the M&A market catch fire.

Uncertainty about future leadership coupled with some attractive financial and strategic attributes makes OceanFirst an interesting takeover prospect for a number of banks in the New York region, experts say. It had a return on assets of 0.94% and a nonperforming asset ratio of 2.09% in the most recent quarter. Its shares trade at roughly 117% of tangible book.

OceanFirst does not comment on M&A speculation, a spokeswoman said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.