After two large acquisitions that have pushed BancWest Corp. across the Rockies and the plains states, the company is adjusting its sights to focus on filling in its newly expanded 19-state service area through branching and smaller acquisitions.
"We have a pretty big footprint - a very light footprint," BancWest president and chief executive Don J. McGrath said in an interview last week. Over the weekend, 204 Commercial Federal Corp. branches from Colorado and Arizona to Omaha and Kansas City were set to be transformed into Bank of the West branches, BancWest's primary bank franchise.
Mr. McGrath said that once the Commercial Federal operations are integrated, "we would love to fill in markets where we are already present."
BancWest, which is owned by France's BNP Paribas, reached the $64 billion asset mark Friday by completing its $1.36 billion acquisition of the Omaha-based Commercial Federal. In doing so it passed Comerica Inc. of Detroit and North Fork Bancorp. Inc. of Melville, N.Y., to become one of the 25 largest banking companies in the United States.
Further expansion is in the design stage. BancWest management, which is given considerable autonomy by its parent, is drawing up plans to add about 20 start-up branches next year, and hopes to complement organic growth with fill-in deals.
"We'll focus on growth, clearly on the sales side by trying to build our brand awareness and generate new customers, but also we look at continuing to grow through acquisitions," Mr. McGrath said.
He didn't rule out "opportunistic" deals outside BancWest's current territories but said "obviously the markets where we are present is where we could see the biggest bang from an acquisition."
Mr. McGrath planned to be in Omaha today visiting branches as part of the transformation. A year ago, almost to the day, he made a similar journey to Fargo, N.D., to mark another major Bank of the West acquisition. Last December it bought Community First Bankshares Inc. of Fargo for $1.2 billion, and Mr. McGrath was there Dec. 6 for that branch makeover. The Community First acquisition moved Bank of the West into 10 additional states, including Utah, Iowa, and the Dakotas.
Analysts see BancWest as an important revenue growth source for BNP Paribas, which has assets of $1.46 trillion. In addition to the Community First and Commercial Federal pickups, BancWest bought USDB Bancorp, a 16-branch banking company in Stockton, Calif., in January for $245 million.
In a report issued Nov. 28, Jacques Henri Gaulard, an analyst in London with Merrill Lynch & Co., called BancWest one of BNP's three "major drivers" of revenue growth, along with investment banking and its European consumer finance unit Cetelem SA.
Next year BancWest will have cost savings of $54 million on the Commercial Federal acquisition and in 2007 it will have "revenue synergies" of $12 million from the acquisition, he wrote.
BancWest is already moving its mortgage processing operations to a new site in Omaha. Mr. McGrath said it expects to have 600 employees in the site. In November it also designated Omaha as the headquarters for Bank of the West's newly created Great Plains division - one of eight regional banking groups.
In an interview Friday, Simon Maughan, an analyst at Dresdner Kleinwort Wasserstein in London, said BNP's success in the United States is due in part to the Paris executives' hands-off style.
"What they think they do best is own a U.S. bank and let the locals get on with managing it," Mr. Maughan said. "By and large they've let the locals get on with building the franchise. And they've done a very good job with it."
BancWest, which also owns First Hawaiian Bank in Honolulu, said Oct. 20 that third-quarter net income of $148.6 million was up 27% from a year earlier, aided by the USDB and Community First acquisitions and organic growth. Net interest income of $404 million was up 22% from a year earlier and noninterest income rose 31%, to $137 million.
Merrill's Mr. Gaulard called it "a terrific quarter."
BancWest announced the deal for Commercial Federal, a $10.4 billion thrift company, in June. In addition to expanding its geographic coverage, Mr. McGrath said the acquisition helped Bank of the West "fill in its footprint, particularly in the Midwest but also in Colorado," where it now has 100 branches.
He said Bank of the West considers the addition of the Midwest branch network over the past year as "an opportunity to expand our geographic footprint in the specialty businesses" of agricultural, SBA, and church lending. It is also increasing its insurance business in the new markets. In mid-November it announced the acquisition of Barlow Agency Inc. in Gillette, Wyo.
"We think that's a great fit for our branch approach, co-locating agencies in some of those markets where we are very strong, and we would like to continue to grow that business very aggressively," Mr. McGrath said.
