Many banks are wringing their hands about growth, but a small group of regionals have an even weightier imperative: growing enough to avoid the wrong end of a takeover offer.

In the near term, these regionals are considered safe on their own, able to lean on a combination of funding from the Troubled Asset Relief Program and a likely stream of government-assisted deals.

But what happens after Tarp is anyone's guess. The big, unaided acquisitions and abundance of lending opportunities that fueled previous asset growth may not come around again soon. The banks will have to find and seize other growth opportunities to emerge as powerhouses — and avoid takeovers.

Anthony Polini, an analyst at Raymond James & Associates, said he believes individual story lines could start playing out late next year. "I think most companies will be in a position to pay back Tarp by the end of 2010," he said. "And then we'll see what the bigger picture is, where the destinies lie."

Since 2004, BB&T Corp., SunTrust Banks Inc., Regions Financial Corp., Fifth Third Bancorp and KeyCorp built formidable franchises of $100 billion to $200 billion in assets, placing them head and shoulders above most other regionals, yet significantly smaller than the biggest banks. Over that time, assets at those five banks grew 28%, to $952.8 billion.

The story has been markedly different in 2009, as the banking industry copes with deteriorating credit quality, slow-to-nonexistent economic growth and a reluctance to acquire.

Assets at those banks fell 0.3% during the first nine months of the year; excluding BB&T's government-assisted purchase of Colonial Bank this summer, the decrease would have been about 6.5%.

No one is looking for substantial growth.

"The landscape is beginning to change for the betterment of banking, but it is happening slowly," said Michael O'Boyle, an investment banker at Sterne Agee Financial Services Inc. "I still think we have a number of years to go" before regionals have a shot to grow significantly. "Commercial lending bothers me, and we have an interest rate environment that will be tough for at least the next three quarters."

Christopher Marinac, an analyst at FIG Partners, expects more of the same until at least 2011, with banks offsetting any gains from government-assisted deals with branch closings and asset dispositions.

No one is worried about survival over that period, though. The big regional banks were given more than $17 billion in Tarp capital and each went through the government's May stress test.

"The larger regionals may not thrive, but they will survive, at least over the near term," Polini said.

BB&T has already exited Tarp and appears to be in the best relative shape to expand, analysts said. Yet it is difficult for analysts to envision CEO Kelly King aggressively pursuing the $35 billion in assets needed to reach $200 billion. (Colonial, for instance, added about $22 billion in assets, making it BB&T's biggest acquisition to date.)

King said he does not want to return to the serial acquisitions that built the company into a big regional during the 1990s. "We are just not interested in growing for growth's sake," he said during a Nov. 5 presentation at a conference hosted by the BancAnalysts Association of Boston Inc.

Analysts agreed that 2011 could see the return of bigger bank mergers, with capital levels, credit quality and overall stability emerging as key determinants for who stays and who goes. All are curious but uncertain about the banks that will fall into either category.

"The tradition with bankers is that in the bad times, they don't want to sell because it's the bad times, and if it's the good times, they wonder 'Why do we need to sell?' " Polini said.

Analysts are most skeptical about significant growth opportunities for Fifth Third and Key, since their primary operations remain in slow-growth Midwest markets. Fifth Third in recent years entered Florida and the Carolinas through acquisitions, where it also gained more exposure to problematic real estate development loans.

David Hendler, an analyst at CreditSights Inc., said he believes Fifth Third and Key are destined to sell eventually after a period of "muddling" through the recovery.

"It is hard to figure out what the asset opportunity is for the Ohio banks," he said. "We know they have liquidity, so I think eventually they will be absorbed."

Hendler said SunTrust, which is also deposit-rich, is another big regional that could find itself selling under similar circumstances.

Marinac said another big indicator for those banks, along with Regions, will be their ability to quickly move bad assets off the balance sheet.

"There is a more credit-intensive focus at those banks," he said.

"They seem to be in more of a survival mode than a strategic mode," he added.

"At some point, they have to grow to survive, or they will be part of a merger," with big deals more likely in 2012.

O'Boyle, meanwhile, said the past 18 months have taught everyone to never underestimate the government's ability to switch from supporting the big regionals to working against them.

"I think Washington will discourage" acquisitions that create much larger banks through stricter approval processes, O'Boyle said.

"If deals do take place, I think the regulatory authorities are really going to be able to dictate who takes out who."

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