Sovereign Bancorp is said to be on the prowl for yet another acquisition target, which may be making some investors nervous.

The Pennsylvania thrift is already in the midst of three acquisitions of thrifts and commercial banks announced from September through December.

"Sovereign has proven itself very adept at acquisitions," said bank analyst Don J. Kauth of BT Alex. Brown. "The question is whether they can digest all those acquisitions without indigestion."

The company, which has lately focused its expansion moves in neighboring New Jersey, is now said to be looking around Pennsylvania and adjacent Delaware.

Banks or thrifts the company could be looking at are Commonwealth Savings Bank in Delaware and Firstrust Savings Bank in Philadelphia, market experts said.

Bank experts agreed that the latest effort is in keeping with Sovereign's announced strategy of remaking itself in the image of a commercial bank. It is based in Wyomissing, Pa., near Philadelphia.

"I expect they will continue their strategy," said bank analyst Chad Yonker of Fox-Pitt Kelton Inc. "They have a long history of acquisitions."

The three pending acquisitions are First Home in Pennsville, N.J., for $86 million; Carnegie Bancorp, $94 million; and ML Bancorp, $345 million.

The asset size of the thrift once these deals close is estimated at $17.9 billion, said Mr. Yonker.

Sovereign chief financial officer Karl D. Gephart declined to discuss details of the company's acquisition strategy but pointed out that deals have helped boost the company's earnings per share and earnings growth.

The share price has indeed come a long way in the last year. But in the last three months, Sovereign's stock price has dropped about 10% from its high of $21.625, suggesting that some investors may be anxious about the firm's acquisitive nature.

The issue, as Mr. Kauth put it, is: "Can a company become very big very quickly without taking your eye off the ball, which is the company itself."

But Mr. Gephart said he was "unaware of large shareholders who are unhappy about" the company's acquisition policy.

"It's just one of those points where the stock price is off," Mr. Gephart said.

Others say the stock price has dipped because speculation that Sovereign itself was an acquisition target has waned since December, although it has not completely disappeared.

"Strong franchises wearing the consolidators hat often look attractive," said Michael S. Hodes, bank analyst at Goldman, Sachs & Co.

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.