Banks and thrifts eager to bulk up in the West take note: Today is the deadline for bids on branches and deposits to be divested in four states in connection with the merger of Wells Fargo & Co. and First Security Corp.
The total package will amount to $1.4 billion of deposits and associated loans at 37 Wells Fargo and First Security branches in Idaho, Utah, Nevada, and New Mexico.
The divestitures were required to allay antitrust concerns that regulators raised after Wells Fargo announced in April that it would acquire Salt Lake City-based First Security.
Four of the region's largest companies are expected to duke it out for the bulk of the branches, including BancWest Corp., U.S. Bancorp, Golden State Bancorp, and Washington Mutual Inc. Each of these banking or thrift companies has been expanding outside its home state, and all of them have expressed an intent to boost their market share in the West.
Smaller regional companies, including Compass Bancshares, based in Birmingham, Ala., and Bank of Oklahoma, may also bid, a source said.
The divestiture is slightly higher in deposits - by $200 million - than Wells Fargo predicted when the San Francisco company announced its intention to buy First Security.
Marilyn Taylor, a spokeswoman for Wells Fargo in Phoenix, said the company hopes to have winning bidders approved by federal regulators by the end of the month. She declined to give the timetable and conditions for the bidding process.
All eyes are on BancWest of Honolulu. The company came agonizingly close to adding an inland Western state to its largely coastal market presence when it won the bidding for 68 branches, most of them in Utah, in a divestiture stemming from the planned merger of First Security and its intracity rival Zions Bancorp.
That merger was abandoned in April after it failed to win the support of Zions shareholders. The episode capped months of escalating tensions between the would-be partners, ignited by an early-March profit warning by First Security that forced Zions' merger adviser, Goldman Sachs & Co., to withdraw its fairness opinion on the transaction.
BancWest, which would have become the second-largest deposit institution in Utah if the First Security-Zions deal had not collapsed, was left out in the cold. Many expect it will try again.
"In general we are interested in acquisitions, particularly in areas where we can get a sufficient market share adjacent to our existing footprint," said John M. Stafford, a spokesman for the Bank of the West, the banking company's principal operating subsidiary.
He, like representatives of the other potential bidders mentioned in this story, declined to comment on the upcoming divestitures. Some did not return calls.
Banks interested in the Wells and First Security branches will be able to place bids only in select states - and they will not be able to place bids in individual metropolitan areas within those states, according to a source familiar with the terms of the bidding. That may benefit smaller regionals such as Birmingham, Ala.-based Compass Bancshares, which has been snatching up small and midsize banks in the Southwest. In July, Compass completed the acquisition of $390 million-asset Founders Bank of Arizona.
Bank of Oklahoma, which owns Bank of Albuquerque, is also thought to be interested in bidding for branches in one of the states, particularly New Mexico, said a source.
Albuquerque and Las Vegas are the juiciest plums among the eight metropolitan areas in which Wells Fargo and First Security will shed branches. In Albuquerque, 21 branches with $720 million of deposits are up for grabs.
"This is a good, concentrated presence, which would be fairly attractive for a bank entering the market," said Joseph K. Morford, an analyst at Dain Rauscher Wessels in San Francisco. It might be especially attractive to First Security, which has a 10% market share in New Mexico through its First Security Bank of New Mexico subsidiary.
Las Vegas might be even more tempting. Fewer branches there are up for sale, the fast-growing area has been a big draw for both Golden State and Washington Mutual. Wamu started opening branches in southern Las Vegas this year and plans to open at least 21 in the state by next April. California Federal Bank, the main subsidiary of Golden State Bancorp, has a 5% share of the Nevada market. Executives of Golden State have said the company would like to expand in Nevada.
Related Content Online:
- Washington Mutual's stock performance (Source: Thomson Investors Network)
- Golden State Bancorp's stock performance (Source: Thomson Investors Network)
- U.S. Bancorp's stock performance (Source: Thomson Investors Network)
- BancWest's stock performance (Source: Thomson Investors Network)
- Compass Bancshares' stock performance (Source: Thomson Investors Network)
- Wells Fargo's stock performance (Source: Thomson Investors Network)
- First Security's stock performance (Source: Thomson Investors Network)