The planned sale of BancTrust Financial Group (BTFG) could have a big say in when and how troubled banks along the Gulf Coast — one of the country's rare growth markets — change hands.

More broadly, it could serve a barometer of how willing the industry's few able buyers are to do complex deals in an improving economy.

The Mobile, Ala., company, which has $2 billion of assets, said last week it would sell itself after an unsuccessful attempt to raise private equity.

Experts peg at least five banks with operations in Alabama that could be buyers. They are: Hancock Holding (HBHC) of New Orleans; Iberiabank (IBKC) of Lafayette, La.; BB&T (BBT) of Winston-Salem, N.C.; Home BancShares (HOMB) of Conway, Ark.; and BancorpSouth (BXS) of Tupelo, Miss.

The 41-branch BancTrust could also be a fill-in opportunity for Trustmark (TRMK), of Jackson, Miss., which does not have branches in Alabama but opened a mortgage office there last year.

Those institutions and BancTrust either declined to comment or did not return calls.

BancTrust is attractive despite its deep construction loan woes and scattered upstate footprint. It is a relatively large, independent community bank, which gives it scarcity value. It is also the fifth-largest deposit holder in Mobile, an important shipping and trucking hub with great growth prospects.

It has "a footprint that at least on paper is very attractive," says Jeff Davis, an analyst with Guggenheim Securities.

There should be "a lot of interest," he says. But "this won't be the cleanest engagement."

BancTrust is unprofitable, highly leveraged and plagued with large amounts of overdue construction loans. Everyone knows it is for sale, which raises the prospect of customer flight.

Investment talks with Capital Z Partners and Pine Brook Road Partners ended after three months on March 15 after the parties failed to settle on terms. Bibb Lamar Jr., BancTrust's president and chief executive, indicated in a press release March 21 that the firms had offered too low a price.

BancTrust has hired Keefe Bruyette & Woods (KBW) to run a sales process.

Pricing BancTrust could be tricky because its debt may exceed its equity by a wide margin. It has a total of $104 million in debt outstanding to the Treasury Department, Federal Deposit Insurance Corp. and preferred shareholders. Its common equity was just $115 million at yearend, before it revised its 2011 results last week to reflect a $50 million loss in 2011, rather than the $1.4 million it initially reported. The higher loss was due to a writedown and costs related to its capital-raising plans.

Davis estimates BancTrust's adjusted tangible common equity may be as low as $60 million. The new round of loan markdowns may not be its last, he says, given how more than 9% of its assets were nonperforming at yearend.

Difficulty making the numbers work could winnow the list of potential buyers to its closest, strongest rivals.

Hancock and Iberiabank are serial acquirers with shares that trade at strong multiples to their equity. That means they can pay a higher price than others in stock deals with less dilution to their shareholders. Overlapping branch networks could result in sizable cost savings.

Hancock is familiar with BancTrust and its markets, having purchased a mutual rival, Whitney Holding of Gulfport, Miss., last year. Hancock has the sixth most deposits in Mobile, according to regulatory data. Merging with BancTrust could make it No. 2 there.

Iberiabank announced a deal this month for a small Florida bank. That might not preclude it from pursuing BancTrust because the other transaction, for Florida Gulf Bancorp in Fort Myers, Fla., is fairly small. It should have ample time to pace the mergers, and regulators would have the incentive to let it do so, as folding BancTrust into a healthy institution is in their interest.

BB&T has shown an appetite for Alabama banks and for tricky deals. It purchased the failed Colonial BancGroup in Birmingham in 2009. It also has a deal in the works for most of BankAtlantic Bancorp in Fort Lauderdale, Fla., a deal that was nearly derailed by a court challenge. The question is whether BancTrust is worth the trouble of trying to do another small, potentially complicated transaction.

Home BancShares' interest could be tempered by a stated preference for buying banks that operate in Florida. BancorpSouth recently raised capital and wants to be a buyer, but the relatively low multiple its shares trade at when compared to the others could hinder its buying power.

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