The stocks of New England's regional banks were mixed on word of Fleet Financial Group's deal to acquire BankBoston Corp.
People's Bank, Bridgeport, Conn., rose 25 cents, to $29.50; and UST Corp., Boston, added 93.75 cents, to $22.9375.
But Peoples Heritage Financial of Portland, Maine, dropped 12.5 cents, to $18.6875; and Webster Financial Corp. of Waterbury, Conn., slipped 12.5 cents, to $29.875. Another large banking company in the area, Citizens Financial Group, Providence, R.I., is owned by Royal Bank of Scotland Group.
The midtier banking companies now have more cachet as takeover targets, and their shares could rise as a result, analysts said.
"These smaller regionals are now the primary potential acquisition candidates," said Kevin Timmons, banking analyst with First Albany Corp.
"They moved right to the top of the list," Mr. Timmons said.
Indeed, an acquisition of BankBoston or Fleet was long seen as the entry point for companies such as BankAmerica Corp. or First Union Corp. that wanted to expand into New England, analysts said.
Now, with Fleet joining BankBoston, "it's slim pickings for anyone who feels compelled to enter the region," said Sean Ryan, a banking analyst at Bear Stearns & Co.
Still, larger players might not mind being locked out of the Northeast, because of the market's maturity, Mr. Ryan said.
"If there is one section of the country you can't get into via acquisition, it's just as good that you don't get into the slowest growing one," Mr. Ryan said.
Aside from being seen as potential takeover targets, the New England region's remaining banking companies could gain by picking up branches that Fleet must divest, analysts said.
"This could be quite profitable for some of these smaller banks," Mr. Timmons said.
Shares of banking companies in other regions also were up.
BankOne Corp. gained $2.125, to $57.0625; PNC Bank Corp.$1.75, to $58.6875; and Mellon Bank Corp. $2.5625, to $73.50.
The Standard & Poor's bank index rose 0.89% and the Dow Jones industrial average added 0.83%. The Nasdaq bank index was up 0.51% and the S&P 500 gained 0.98%.
The market was responding to renewed purchases of banks by banks, analysts said.
"It's the merger game," said Stephan Biggar of Standard & Poor's equity group. "Takeover activity has been fairly light over the past several months and this deal puts merger action back in the limelight.
"There certainly will be more mergers," Mr. Biggar said. "The long term consolidation trend remains intact."