Philadelphia banks -- a second-growth forest where the handful of several-billion-dollar banks compete with national giants Wells Fargo, PNC, TD and Citizens -- are worried about a couple of things, writes veteran bank analyst Frank Schiraldi in a report to clients of Sandler O'Neill + Partners:

- Too many apartments are being built for the "frothy" Philadelphia market;
- "Irrational" loan pricing is making it tougher to profit from loans.

But the independent banks still have plenty of room to win more business, Schiraldi adds after a visit here: "Nobody is seeing any signs of deterioration in credit," and lenders don't feel pressure to ease up on their underwriting when they approve deals, Schiraldi adds.

He told clients that Philadelphia- and Reading/Allentown-focused Beneficial Bancorp, Bryn Mawr Bank Corp., Customers Bancorp, Tompkins Financial Corp. and Univest Corp. are busy stealing lenders and customers from the bigger banks to win more deals.

Indeed, bank acquisitions by out-of-town companies continue to create a "market disruption" that the surviving local banks call "the gift that keeps on giving," Schiraldi added.

"We got the impression that the shake-up from the increase in southeastern Pennsylvania M&A activity would continue to bear fruit for many years to come." These opportunities for new business are encouraging the independents and making them less likely to sell "on the near-term horizon."

Bank-by-bank, Schiraldi notes:

- Beneficial expects it will be able to cut 45% off the cost of operating the former Conestoga Bank as it closes 5 of Conestoga's 14 branches and consolidates its systems and administration.

Beneficial says the acquisition will help expand its Small Business Administration and leasing businesses.  And generally, "organic loan growth has begun to pick up," especially for commercial real estate. The company is hiring more business lenders. It "is ready to pursue another acquisition," but warned "targets" here are getting harder to find. Maybe down the Shore.

Bryn Mawr Bank Corp. is done its wrenching management changes, Continental acquisition and tech updates. The bank will look for acquisitions -- especially investment and insurance firms -- rather than share buybacks. There aren't many bank candidates, so Bryn Mawr will likely focus more on stealing business from larger banks. 

Customers Bancorp Inc. boss Jay Sidhu is promoting BankMobile as a replacement for branch banking.  Schiraldi called the platform an "undervalued" asset that Customers is likely to spin off as an independent company in an initial public offering (IPO). Bank Mobile is small -- Schiraldi "reserves judgment" on Customers' hope it's worth $100 million to $200 million pending more information on its deposits and proprietary technology.

He also noted Customers relies heavily on commercial real estate loans and said management is "very confident" its small New York apartment-lending portfolio will resist a slowdown in high-end Manhattan apartment

Tompkins Financial Corp., which is based in Ithaca, N.Y. but owns VIST, with branches north of Philadelphia,  sees "plenty of opportunity in Southeastern Pennsylvania," where its loans grew more than 10% last year thanks to "disruption" from the sale of (presumably) National Penn, Susquehanna and other area banks (both of those were bought by North Carolina-based BB&T.)
Nat Penn refugee Scott Gruber now runs VIST.  Tomkins is "ready for acquisitions" and sees Pennsylvania targets as "more plentiful" than New York.

Univest Corp. -- The bank is expanding north to the Lehigh Valley, west to Lancaster and south to Philadelphia with particular focus on commercial and industrial (not commercial-real-estate) loans.  Also "plenty of opportunity for growth" in the investment business in partnership with Scottrade and TD Ameritrade.