WICHITA, Kan.- Fourth Financial Corp., which has announced 15 acquisitions in the last 16 months, may be getting more mileage out its ambitious acquisition program than any other bank around.

"When we started this we said this was a one-tank-of-gas program," said David L. Strohm, an executive vice president who oversees acquisitions for the Kansas company, "We said that anywhere we can get to on one tank of gas, we'll go there."

In Kansas, Oklahoma, and Missouri, one tank apparently goes a long way.

Fourth Financial, the parent of Wichita-based Bank IV, has nearly doubled its asset size to $7.3 billion since 1990. And its executives say they aim to add $2 billion of new assets annually over the next few years.

Tight Focus

In the process, the bank has developed a reputation not only as a savvy acquirer but also as an extremely focused one.

Most analysts praise Fourth Financial for solidifying its already dominant position in Kansas, while almost overnight building itself into the third-largest bank company in Oklahoma, a heavily fragmented market.

The drive has been stimulated by the liberalization of interstate banking laws in Kansas on July 1, 1992. The law creates expansion opportunities in all of Kansas' bordering states except Iowa.

For all its ambitions, however, Fourth Financial itself is frequently mentioned as a takeover candidate. Indeed, some analysts say its rapid market expansion only increases its appeal to certain out-of-state giants, such as Minnesota's Norwest Corp., Ohio's Banc One Corp., or St. Louis-based, Boatmen's Bancshares.

Not Ready to Succumb

Boatmen's is the most frequently, mentioned acquirer because of interstate restrictions on the other two companies.

Nevertheless, most observers say Fourth Financial has more empire building to finish before it succumbs to another company.

"It can still grow quite a while, maybe 70% more, before it would become too large to be acquired," said Steven Schroll, senior bank analyst at Piper Jaffray Inc. in Minneapolis.

But Jerry Swords, president of Swords Associates Inc., a Kansas City, Mo.-based bank consulting firm, sees a day of reckoning coming soon. They'll either get no the $10 billion-asset size or they'll be acquired," he said.

Beside the Point

Such talk is a distraction to Darrell G. Knudson, the chairman and chief executive officer of Fourth Financial. The executive, who joined the company from First Bank System Inc. three years ago, said he doesn't stay awake at night worrying about whether his company will be acquired or remain independent.

"We think it's a mistake to have a focus on either one," he said during a recent interview. "We won't slit our wrists if we don't reach $10 billion by 1995, because, that's not our objective."

What drives Mr. Knudson and his top managers is avoiding the loan Problems that stung them in 1990. That year, Fourth Financial's profits plummeted 49% from the previous year and its return on assets plunged 60% to 0.47%.

The cause: big provisions related to 13 commercial real estate loans (known internally as the "dirty baker's dozen") to long-standing customers in Kansas.

Diversification Drive

Since then, the company has installed rigorous credit standards and pursued its diversification plan. The drive for diversification is circumscribed by the company's credit process - its standards are superimposed on the portfolios of acquisition candidates - and by certain size requirements.

Fourth Financial says its primary targets are leaders in their home markets with assets ranging between $100 million and $500 million of assets.

Another factor driving Fourth Financial is the fact that its home state is becoming uncomfortably crowded since the interstate prohibitions were relaxed.

Since last year, about $5.8 billion of bank assets have been acquired in Kansas, according to SNL Securities.

Missouri banks have been the most aggressive, focusing predominantly on banks in affluent Johnson County, Kansas, which borders Kansas City, Mo.

In-State Expansion

Fourth Financial itself has been an active acquirer - picking up some $526 million of assets in the Sunflower State since April 1992 and cementing its status as the Kansas' biggest bank. Its in-state growth was assured when Kansas lawmakers last spring raised the cap on deposit market share of any one bank from 12% to 15%.

The legislators rejected a measure that would have limited out-of-state bank holding companies to the 12% deposit cap. Observers say the decision was a significant victory for Fourth Financial. Lawmakers guaranteed the Kansas bank's viability as a buyout target while giving it room to add another $1.5 billion in assets.

Nevertheless, Fourth Financial's biggest appetite has been in neighboring Oklahoma, where it is concentrating on acquiring healthy banks in a region that is strongly rebounding from its oil bust days.

Almost No. 3 in Oklahoma

In the past 18 months, the company has announced plans to buy about $2 billion of assets in the Sooner State, Upon completion of all the deals, Fourth Financial would be the third-largest financial institution in a state where 430 banks divide about $29 billion of assets. The move fits the one-tank philosophy. Fourth Financial's Oklahoma empire is centered in Tulsa, a city closer to the company's Wichita headquarters than is Kansas City.

Mr. Strohm, the acquisition czar at Fourth Financial, said the bank is less than halfway toward its goal of accumulating $4.5 billion in the state.

Fourth Financial sees the opportunities for the greatest growth is in Oklahoma," said Kay Lister, a bank analyst with Keefe, Bruyette & Woods Inc. in New York City.

Deposits Retained

Indeed, the Bank IV name that goes up on the Oklahoma branches appears to have been readily accepted in the state. The company said it has retained nearly 99% of all acquired deposits.

Not all the news is good, however. Fourth Financial's efficiency ratio - which measures noninterest expenses, excluding foreclosure costs, as a percent of revenue - stands as high as it was in the mid-'70s in some banks. Corporate-wide, Fourth Financial in the second quarter spent 66.5 cents for every $1 of revenue - up 2% from a year earlier.

The bank and analysts say the expense problem reflects overstaffing that should shrink as the acquired banks are consolidated and efficiencies are realized. The company maintains that it integrates the computer operations of its acquired banks into its own system within 90 days.

"What a customer sees won't be affected," said Mr. Strohm. "It's what's behind the tellers where we have changed things."

Eastward, Ho!

Fourth Financial recently began another major stage of its expansion strategy - moving eastward into Missouri. It said on July 16 that it will buy Great Southern Bancorp., a Springfield-based thrift with $515 million of assets.

Observers expect the move to be followed by a slew of statewide purchases in Missouri. However, it is not clear if the company will push into the already heated St. Louis marketplace or focus on Missouri's western border, which abuts Kansas and northeastern Oklahoma.

St. Louis is tempting - more populous than all of Kansas - but it would stretch Fourth Financial's one-tank rule.

"We don't worry about how big we can be," said Mr. Knudson. "We worry about how effective we can be in the individual markets we serve. For the next couple of years we're kind of busy with what we've already got started."

Bidding Wars

Fourth Financial's pricing strategies for its acquisitions have been generally well received by investors, but some analysts are afraid that bidding wars with neighboring banks may be tilling the company to overpay.

Many of the bank's early acquisitions involved small banks that were not courted by other suitors.

Mr. Swords noted that the healthy institutions Fourth Financial has been buying in Oklahoma lately drew high multiples over book value.

In June, for example, Fourth Financial said it would buy Western National Bancorp in Tulsa, which has $212.5 million of assets, for $34.2 million. That equates to about 2.74 times Western's book value, according to SNL Securities.

Mr. Strohm asserted that his company's deals have not diluted earnings or shareholder value.

"I don't think that overall the general prices have been bid up," he said. "We've seen multiples in the 1.75 to 1.9 times range, but we have not seen many ozone prices."

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