U.S. Bancorp struck its third deal this year for a Southern California bank Thursday, saying it would buy Peninsula Bank of San Diego for $104 million in stock.
The $77 billion-asset Minneapolis banking company would pay 3.35 times Peninsula's book value and 21 times its trailing 12-month earnings. U.S. Bancorp president Philip Heasley said the deal for $456 million-asset Peninsula would give the company a strong foothold in a market where "there is no clear banking leadership."
The Peninsula transaction comes on the heels of U.S. Bancorp's $314 million acquisition of San Diego's Bank of Commerce in July and its announced $958 million deal for Western Bancorp of Newport Beach. That deal is expected to close in the fourth quarter.
Ironically, Peninsula had agreed to be bought by $2.5 billion-asset Western last summer but terminated the deal after Western's stock price slid 20%.
Analysts said the Peninsula deal is consistent with U.S. Bancorp's new strategy of acquiring smaller banks to build market share in certain regions.
"They're starting to build a footprint in Southern California, which we think is good for the long haul," said James R. Bradshaw, a bank analyst at Pacific Crest Securities in Portland, Ore.
In a prepared statement, Peninsula chairman and chief executive officer John G. Rebelo Jr. said one of the factors that attracted his bank to U.S. Bancorp was the company's $66 million in community contributions last year. "Our customers and community will be well served by this union," he said.
Mr. Rebelo and Peninsula's president, Larry L. Willette, are guaranteed to stay on board until Dec., 31, 2000. But Mr. Heasley said the company would like the executives stay put and help expand U.S. Bancorp in San Diego.
"We're very interested in their leadership beyond 2000," said Mr. Heasley.
Under the deal as announced, Peninsula shareholders would receive $40 per share of U.S. Bancorp stock for each share they own. Under the agreement, Peninsula shareholders would receive no less than $35.29 per share and no more than $43.48.
Once the transaction closes, U.S. Bancorp would have $6 billion of deposits and 140 branches in California.
Shares of U.S. Bancorp closed at $30.9375, down $0.375. Peninsula's stock rose $4.50, to $35.00.
