PNC boss James Rohr boasts the bank, Pennsylvania's largest, "can handle merger integrations well," writes David Hendler, head of bond research firm CreditSights, in a report to clients.
Who will it buy? "Capital One could make an attractive target for PNC," Hendler writes. The Virginia-based bank, one of the Big 5 credit card issuers, would also give PNC more branches around New York and Washington, and nearly 200 more in Texas (also a bunch in Louisiana, though that's not so attractive.)
"Another potential acquisition candidate for PNC is M&T Bank" of Buffalo, which has branches across Pennsylvania, upstate New York, and the DC area, Hendler adds. M&T has also been reported in inconclusive talks with Sovereign Bank owner Banco Santander of Spain. (Corrected)
PNC's in a position to buy because it saw the 2008 credit crisis coming and dumped its subprime and corporate-lending business early, Hendler says. Though it would be even richer if it hadn't wasted so many billions buying back its own shares instead of investing in the business or saving to cover bad loans, he adds.
Other potential PNC targets include SunTrust of Atlanta, Fifth Third of Cincinnati, and Regions Financial of Birmingham. Those Sunbelt-oriented banks got fat in the long boom years by raking in profits on real estate development, but now they face tough challenges figuring out how to change their focus. By contrast, Hendler says, "PNC already has long term experience" and "a well-worn playbook" in making money from "lackluster growth conditions" by financing small Pennsylvania exporters, East Coast service industries, and other more resilient sectors.