You could almost hear a groan from bankers at a recent bank mergers conference when Richard Zona took the stage along with outspoken analyst Thomas Brown.

The bankers what was coming: a condemnation of the prices paid in the mergers that have been sweeping the industry this year.

Mr. Brown, an analyst at Donaldson, Lufkin & Jenrette Securities Corp., is well known as a gadfly to industry titans like First Union Corp. and U.S. Bancorp. And Mr. Zona, the chief financial officer of First Bank System Inc., is becoming almost as prominent along those lines.

"Chief executives of banks have clearly overpaid for acquisitions," he told the audience. "I continue to scratch my head on some of these deals."

Last month, First Bank System agreed to buy a Nebraska bank for $1 a share less than its $39 market value, a shocker in a year when the average premium paid for a bank has been 28.2%, according to SNL Securities Inc.

The $700 million deal for Firstier Financial did not splash cold water on the high prices being paid for banks, however, Mr. Zona aid in a recent interview, citing the hefty premiums paid in the ensuing weeks for Bank South Corp. and Summit Bancorp..

Since arriving at First Bank System from Ernst & Whinney (later Ernst & Young) in 1989, Mr. Zona has prided himself on being "unbankerly," and not just because of his accounting background.

While his denunciation of acquisition pricing helps prevent sellers' expectations from becoming unrealistic, his criticism of his peers is unusual in a banking world known for its clubbiness.

Although Mr. Zona's critiques may have ruffled some feathers, he and First Bank System chief executive John F. Grundhofer have the respect of their peers for building the Minneapolis bank into one of the industry's top performers.

This was done, Mr. Zona said, by treating the company as a business rather than a bank, .

First Bank System, which is spread across 11 states, was one of the first banks to divide its businesses by product lines, and not by region and state.

Mr. Zona arrived on the scene six years ago when the bank, beset with troubled loans, was on the verge of collapse.

A few months later, Mr. Grundhofer arrived from Wells Fargo & Co. Although he laid off scores of workers, his new finance chief was spared. "The fact that Jack didn't fire him instantaneously is a measure of Rick's ability," said Mr. Brown.

Mr. Zona and Mr. Grundhofer have fashioned a close working relationship, and if there is criticism of the bank, it is that the two of them are unwilling to delegate authority.

"Rick has no illusions about how profitable or gentlemanly banking will be in the future," said Ben Crabtree, an analyst with Dain Bosworth in Minneapolis. "Rick is every bit as hard-nosed as Jack."

It is hard to find a shareholder willing to complain. The company's stock is now one of the industry's high fliers.

"In the banking industry, Grundhofer and Zona have been unique in avoiding pricey acquisitions and returning value to shareholders," said Lester Pollack, managing director of Corporate Partners, which owns 6.2% of the bank.

It was Mr. Pollack's group, a unit of Lazard Freres & Co., that infused $175 million into First Bank System in 1990 when few investors were willing to touch banks. At the time, the bank traded at $14 a share. Today it trades at $47.

Under Mr. Zona, the bank has moved to shed unprofitable businesses such as mortgage banking and realty insurance, and focus on retail banking, payment systems, and trust operations.

Acquisitions complement that effort, but are not central to it, he said.

"It is more of an opportunistic kind of strategy," he said of the bank's acquisitions. Part of that opportunity is created by intensive negotiations with not only management of target banks, but their shareholders.

Convincing shareholders that First Bank's currency is more valuable than other banks' stock is central to acquisitions, he said.

In the Firstier case, it was this formula that helped the Minneapolis bank beat out rival bidders like Boatmen's Bancshares and Banc One Corp., Wall Street sources said.

Mr. Zona worked closely with such Firstier shareholders as Warren Buffett, the Omaha billionaire investor, as part of that deal.

Unlike his competitors, Mr. Zona does not assume revenue enhancements in the year after a merger. He is fond of saying First Bank is aggressive on cost cutting estimates and conservative on revenue estimates.

"If you are not realistic about that, you are kidding yourself," he said. "I don't care how well you execute - there are going to be some complications."

He also denounces mergers, such as First Union's acquisition of First Fidelity Bancorp., that are predicated on reaching economies of scale necessary to afford investments in technology. First Bank System has invested $300 million in technology over the last five years without having to double or triple in size, Mr. Zona said.

"Investors don't want to hear the diversification and technology arguments," he said. "Technology does not cost that much."

Mr. Zona, who has overseen 22 acquisitions since he arrived at the bank, derides bankers who ignore these realities.

While some of his competitors have grown by leaps and bounds, his bank's growth has been more modest, from $24.8 billion in assets in 1990 to $36 billion once the Firstier transaction is completed.

Rumors of a sale or merger with BankAmerica Corp. or First Interstate Bancorp have circulated for some time, but Mr. Zona denied anything was afoot.

But if a merger seems likely to boost shareholder value, Mr. Zona said, then First Bank System will take a look.

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