Colonial BancGroup of Alabama is leapfrogging to Las Vegas.
Breaking out of its southern base-it also has banking offices in Florida, Georgia, and Tennessee-Colonial announced an agreement Thursday to acquire Commercial Bank of Nevada for $29.5 million of stock.
The deal indicates how fast-growing Las Vegas, a city that has diversified well beyond gambling and tourism, is turning into a banking boom town.
Such industry leaders as BankAmerica Corp., Wells Fargo & Co., Norwest Corp., and Citicorp have already established themselves as the largest banks in Las Vegas.
All are much bigger than $7.5 billion-asset Colonial. They were lured by one of the healthiest city and state economies, but unlike Colonial they came in mostly by acquisition or extension from contiguous states.
Commercial Bank of Nevada brings Colonial three branches, $95 million of deposits, and $120 million of assets. Colonial chairman and chief executive officer Robert E. Lowder said his company expects to build on existing mortgage banking activities in Nevada, one of 33 states it serves in that business.
The company has a $13 billion servicing portfolio.
"Las Vegas has experienced a 47% growth in population since 1990, a 48% growth in total households, and a 35% growth in average household income over the last seven years," Mr. Lowder said. "These trends are expected to continue, providing an attractive opportunity to combine the resources of Colonial with the well-managed and well-positioned Commercial Bank of Nevada."
He said interstate banking authority has put Colonial in a position "to make selective acquisitions nationwide in areas of unusually favorable demographic characteristics."
Colonial has been on an acquisition tear, albeit within its home region. Since 1995 it has bought 44 community banks, doubling its assets.
Mr. Lowder's ambition is to amass $15 billion of assets by decade's end, and entering a fast-growth market like Nevada can only help that cause, analysts said.
Colonial is "defining where (it is) going to be growing," said Eric Rothmann, an analyst at Stephens Inc. in Little Rock. "This may be off the beaten track" but would allow for fill-in acquisitions later on.
Commercial Bank, which ranks 14th in Las Vegas deposits, specializes in residential and commercial real estate lending and small-business and professional banking, said John S. Gaynor, its president and CEO.
Mr. Lowder's style is to acquire and leave managements in place, analysts said. Indeed, Mr. Gaynor will become area president in Las Vegas when the deal closes, which is expected by the third quarter.
"This is just their entry to the market," Mr. Gaynor said of his prospective Montgomery, Ala., parent company. "I expect to see Colonial move forward with more acquisitions in the West."
The purchase price amounts to three times Commercial Bank's book value and calls for an exchange of one share of Colonial stock for each share of Commercial.
Mr. Lowder and his two brothers own about 13% of Colonial's stock. They founded the bank 30 years ago.