A second-step conversion completed Wednesday has armed People's United Financial Inc. in Bridgeport, Conn., with $3.3 billion and the potential to be a powerful dealmaker.
The new holding company for the $11 billion-asset People's Bank said it sold 172 million shares at $20 each. That exceeded some analysts' expectations and gives the company leeway to expand its geographic reach and its heft as a commercial lender.
With that much capital, "they can do it," said Rick Weiss, an analyst at Janney Montgomery Scott LLC, in an interview Thursday. "People's can be considered an acquirer of choice."
Analysts on Thursday all agreed the probable target list includes Valley National Bancorp in Wayne, N.J., with $12 billion of assets; Chittenden Corp. in Burlington, Vt., with $6.4 billion; and the $1.5 billion-asset Bancorp Rhode Island Inc. in Providence.
Some also listed U.S.B. Holding Co. Inc. in Orangeburg, N.Y., and Provident Financial Services Inc. in Jersey City as possibilities.
A spokeswoman for U.B.S. and a spokesman for Provident said their companies do not comment on speculation. A Valley National spokeswoman said it had no comment. The other two potential target companies did not return calls seeking comment.
People's said in an investor presentation last August that it would "actively explore acquisition opportunities" and that its areas of interest included New York, New Jersey, and Massachusetts. The company has 158 branches, all in Connecticut, including 73 in Stop & Shop grocery stores. It has said it plans to open 15 branches over three years in Westchester County, N.Y.
People's commercial loans totaled $4.2 billion at Dec. 31, an increase of about 9% from 2005. Deposits were flat at about $9 billion.
Companies raising capital in second-step conversions rarely make a large acquisition. Doing smaller deals to expand the balance sheet is more typical, analysts said.
"This will not be a traditional three- to five-year share repurchase, small acquisition, dividend-and-balance-sheet growth story," however, Matthew Kelley, an analyst at Sterne Agee & Leach Inc., predicted in a note to clients Thursday.
Janney's Mr. Weiss said he, too, expects People's to take a different path than Hudson City Bancorp in Paramus, N.J., which converted to a fully public company in June 2005. Its assets have more than doubled since 2002, to $35.5 billion from $14 billion, and it bought back more than eight million shares in the fourth quarter.
Though the right deal could make People's a heavyweight in the Northeast, some analysts said, its profits could suffer if it pays too much for the wrong company.
"Nothing is going to come cheap for People's," said Mr. Kelley in an interview. "Until we start to see multiples come down, we believe that there are risks to the capital deployment strategy which leads with M&A."
The amount raised makes People's No. 5 in terms of initial public offerings in the financial services sector during the last decade, according to a report from James Abbott, an analyst at Friedman, Billings, Ramsey & Co. Inc. Hudson City raised $3.9 billion.
"If they make the right acquisition, it's going to be a dynamic franchise," said Mr. Weiss. "If they make the wrong one, they're going to destroy shareholder value."
People's stock rose 0.4% Thursday, to close at $43.71 a share.
The shares in People's United are to begin trading Monday.
People's declined to comment for this story, citing a "quiet period" imposed by the Securities and Exchange Commission.
