BankAmerica Said to Seek Nevada Bank

Continuing its expansion drive, BankAmerica Corp. is negotiating to acquire Valley Capital Corp., owner of Nevada's second-largest bank, a source familiar with the talks said Tuesday.

Valley Capital, with $3.2 billion in assets, would be consistent with BankAmerica's goal of holding a large market share where it operates. BankAmerica entered Nevada two years ago but has only a minor presence in the state.

Both Stocks Are Up

It was not clear how far the talks have advanced or what price Valley Capital could fetch. The Las Vegas-based company has a book value of $19.24 million.

Valley Capital's stock on Tuesday rose $4.25, or 18%, to $28.25, giving it a market capitalization of more than $300 million. BankAmerica closed at $34.75, up 50 cents.

A BankAmerica spokesman declined to comment. Valley Capital issued a statement that its management is holding talks to sell the banking company.

Looking at HonFed

BankAmerica has expanded aggressively in the last 18 months, largely by acquiring failed thrifts with government assistance. But the company has shown a willingness to do unassisted deals, accepting the credit risk that comes with purchase of going concerns.

BankAmerica also is negotiating the purchase of HonFed Bank, Hawaii's largest thrift with $3 billion in assets, according to sources close to the talks. The thrift is owned by a partnership that includes former Treasury secretary Willam E. Simon.

Valley Capital last year earned an impressive 1.21% on assets and a 20.22% on equity. But the company this year has been hurt by the slowdown in Nevada's once-hot economy.

In the first six months, Valley Capital's earning plunged 32% to $12.12 million, which translated into a 0.79% return on assets and an 11.84% return on equity. The company's nonperforming assets more than doubled to $53.8 million.

Valley Capital also owns Caliber Bank, Phoenix, Ariz., which has nine branches and $233.2 million in assets.

Expanding in Nevada

BankAmerica's Nevada unit has 21 branches and $477 million in assets. The company entered Nevada in 1989 when it bought Reno-based Nevada First Bank.

Last December it acquired four branches and approximately $250 million in deposits of Las Vegas-based Frontier Savings Association from the Resolution Trust Corp.

BankAmerica chief financial officer Frank N. Newman said in an interview last month that results for the company's Nevada unit had been disappointing because of the bank's small size.

"We would like to have a larger operation," Mr. Newman said. "It's hard to make a decent return with a bank that is low-ranked in market share."

First Interstate Bancorp.'s Nevada unit is the largest bank in Nevada with $3.7 billion in assets.

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