FTN Midwest Research Securities Corp. is the latest investment boutique to offer a roster of banks it believes may be acquired in the next couple of years.
On Monday, analysts at the First Horizon National Corp. unit issued a report with two lists. One names companies that have been the subject of takeover speculation and have "upwards of a 50-50% chance of selling during the next two years." The other ranks banks and thrifts that displayed at least four out of five statistical factors.
Jeff K. Davis, one of the report's authors, said the factors in the second list include having a chief executive officer and chief financial officer older than 59 and insider ownership of more than 15%.
Only the $986 million-asset LSB Bancshares Inc. of Lexington, N.C., made both lists. Astoria Financial Corp., Compass Bancshares Inc., and Huntington Bancshares Inc. were among the largest on the 50-50 list.
"We're not saying the companies are definitely going to sell, but the stars may be aligning for a transaction," Mr. Davis said.
The $22 billion-asset Astoria, of Lake Success, N.Y., has "competitive pressures" and "micro-pressures" from the flat yield curve, Mr. Davis said. Its chairman and CEO, George L. Engelke Jr., is 67, the report noted.
Mr. Davis said Astoria could fetch $30 a share, and he named Hudson City Bancorp Inc. of Paramus, N.J., and TD Banknorth Inc. of Portland, Maine, as possible buyers.
Mr. Davis said consolidation is necessary in the competitive and slow-growth Midwest. The $36 billion-asset Huntington, of Columbus, Ohio, has had mostly "flattish" earnings over the past few years, he said, but it is "anchored in a great market" and is "digestible" and "a natural fit" for three large-cap Ohio banking companies: National City Corp., KeyCorp, and Fifth Third Bancorp.
Another that could snap up Huntington, which had a good second quarter, is Royal Bank of Scotland Group PLC's Citizens Financial Corp. of Providence, R.I., Mr. Davis said.
Kevin K. Reevey, an analyst at BankAtlantic Bancorp Inc.'s Ryan Beck & Co., also sees Huntington as ripe for a sale. The only reason Unizan Financial Corp. of Canton, Ohio, waited two years to be acquired by Huntington was so that shareholders could "double-dip" if Huntington gets sold, he said. (Huntington announced its deal for Unizan in January 2004 but had to wait until March of this year to complete it because of regulatory problems.)
Mr. Davis said that Compass' 63-year-old CEO, D. Paul Jones Jr., would rather sell than hand the reins over to someone from inside or outside the Birmingham, Ala., company. Mr. Davis said Wachovia Corp. of Charlotte and SunTrust Banks Inc. of Atlanta could be interested in buying Compass.
Compass, Citizens, Fifth Third, KeyCorp, Nat City, SunTrust, TD Banknorth, Wachovia, and Huntington declined to comment on the FTN Midwest report. Astoria and Hudson City did not return calls before press time. Royal Bank of Scotland could not be reached for comment.
