“For months, FleetBoston Financial Corp. has been high on nearly every list of bank takeover targets. Bank of America Corp.’s willingness to pay a hefty premium for a bank that has stumbled so badly in recent years has kicked off a vigorous guessing game of who’s next,” wrties Mitchell Pacelle in today’s Wall Street Journal.

“Betting that a flurry of additional deals may follow, investors Monday bid up the prices of a slew of regional banks in hopes that Bank of America’s blockbuster deal will light a fire under other bidders.”

” ‘We’ve been waiting for this one,’ says Anton Schutz, who manages the Burnham Financial Services fund, which owns financial-services stocks.”

“The Bank of America deal confirms Wall Street expectations for a new round of banking mergers. The tumbling of historical barriers to interstate banking in the 1980s and early 1990s set off a round of merger mania that persisted until the end of the decade, when a stalling economy and several overpriced deals cooled the fever.”

“Now, with the U.S. economy on the rebound, many banks have been reporting better results, driven by marked improvements in the quality of their corporate-loan portfolios. But they have seen little or no growth in corporate-loan demand and are bracing for the end of the mortgage-refinancing boom. That’s left some reaching into their toolkits for a quick growth fix — the acquisition.”

“Monday’s deal renewed speculation about other large regional banks that may become targets. Among these, PNC Financial Services Group Inc., KeyCorp, Comerica Inc., and SunTrust Banks Inc. have experienced problems in recent quarters or lagged behind their peers.”

“It also kicked off a new round of talk about smaller regional players blessed with attractive geographical coverage, and that might leap for the kind of premium fetched by FleetBoston.”

“Among the potential targets here are Banknorth Group Inc., based in Portland, Maine, which has operations throughout New England; Webster Financial Corp., a Waterbury, Conn., savings and loan that just bought a thrift in Massachusetts; Sovereign Bancorp Inc. of Wyomissing, Pa., which bought bank branches that Fleet had to dispose of after its 1999 merger with BankBoston Corp.; and Valley National Bancorp of Wayne, N.J., which operates in the lucrative northern New Jersey market.”

“The thinking here is that a payoff could come in two ways. If any of the large banks that were outbid for Fleet still wanted to buy into the Northeast, these smaller banks might be the ticket. Alternatively, if Bank of America fumbles the integration, regional competitors could gain customers.”

” ‘You either win because they have a chance to pick up deposits from the disruption, or you win because the jilted guys say, ‘You know what? We didn’t get Fleet, but we can assemble something close,” ‘says Mr. Schutz.”