Whitney Holding Co. is paying top dollar to boost its presence in the coveted Houston market.

The New Orleans company said Wednesday that it would buy American Bank in Houston for about $63 million in stock, or 3.6 times book. The deal for $280 million-asset American would more than double Whitney’s assets in Houston, which it entered in February by completing its purchase of $240 million-asset Bank of Houston.

John Balkind, an analyst at Fox-Pitt, Kelton Inc. in New York, said the premium to book value is among the highest he has seen in the last six months. “It’s a bit pricey, which is what you’d expect for a decent bank in Houston,” he said.

Its diverse economy and high growth rate have made Houston, the country’s fourth-largest city, a magnet for in-state and out-of-state banks. The area is home to dozens of independent community banks, so there is plenty of opportunity for buyers to “cobble something together,” said Charles I. Miller, managing director of investment banking at Alex Sheshunoff & Co. in Austin, Tex.

Twenty-six Houston-area banks have changed hands since 1998. Two deals were announced in August: BOK Financial Corp. in Tulsa, Okla., said it would buy $424 million-asset CNBT Bancshares, and Washington Mutual Inc. of Seattle said it had a deal for $18 billion-asset Bank United Co., Texas’ largest thrift.

“I think a lot of people have the same idea,” said William L. Marks, chairman and chief executive officer at $5.8 billion-asset Whitney. “You’ve got $50 billion in deposits hemmed up in there. Of course, you’ve got to get in there and shake them loose.”

American Bank shareholders would get 4.41 shares of Whitney stock for each stock owned. Whitney plans to merge Bank of Houston and American Bank into Whitney National Bank when the Bank of Houston deal closes, which is expected to happen in the first quarter of 2001.

But Whitney is not stopping there. Mr. Marks said the company has identified Houston as its primary target for growth and will continue to pursue acquisitions there.

Not that Whitney, which has 118 branches in five Gulf Coast states, is avoiding other markets. In August the company said it would buy $170 million-asset Bank of Prattville in Alabama for $40.5 million, and this month it struck a deal with First Ascension Bancorp in Gonzales, La.

But its move to beef up in the Lone Star State has been especially well received.

“They have to enhance their growth,” Mr. Balkind said. “It benefits them to move into more-dynamic markets — Houston is definitely better than some other markets Whitney is in, like New Orleans.”

Wheeling and Dealing
Whitney's three announced acquisitions since Aug. 8
Announcement Date/Target Assets Deal Price
Sept. 20:
American Bank,
Houston
$280M $63M
Sept. 5:
First Ascension Bancorp,
Gonzales, La.
$93M $22M
Aug. 8:
Bank of Prattville,
Prattville, Ala.
$170M $40.5M

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