your best bet is to look for a decent sized regional or multi-regional player w/a strong brand name and extensive network of retail branches. so often bank acquisitions are driven by the retail side. which makes sense of course. so in banking, there are plenty of decent bank stocks out there that pay out decent dividends, but if you want to try for an M&A play, try for something (and i'm not specifically recommending theses stocks; i havent' researched bank stocks in 8 years, but i used to do it for a living) like a Wachovia, a Commercebank, NorthFork Bank....some bank w/many branches in many states. and if they have strong Other Income such as investment banking, than hey, all the better. for ex, wachovia is known to have solid middle market investment banking. the rest is crap.
on fdic.gov you can find all kinds of great benchmark financial statistics on banks, as well as economic and market info broken down by the FDIC regions. Important ratios in banking include the Return on Assets, Return on Equity, Allowance for Loan Losses as a percent of Loan Portfolio, Efficiency Ratio (the lower the better), net interest margin.
you can do screens and find banks w/high profit margins and strong ratios (like those mentioned above) relative to their peers. fdic allows you to show a selected bank compared to its peer group in the next column. ROA should def be above 1.0. ROE should def. be above 10%. Net Intrest Margin should def be about 4%. Allowance for Loan Losses should be around 1.5%.
spend some time on the fdic web site, and maybe check out some research reports for the acquisition plays.
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