Acquisitions will continue to be crucial to profitable growth, according to a group of regional bank chief executives who addressed an investors conference here last week.

Norwest Corp. chief executive Richard M. Kovacevich told those at the Montgomery Securities conference that he would keep buying banks because he views them as national distribution offices. Bank branches are still the most effective sales centers, he said. Last year, Norwest added 279 branches, mostly through acquisitions.

Mr. Kovacevich is a big believer in acquisitions, saying he likes to buy a bank that sells at least two products per customer and then tries to improve that ratio to five per customer.

Norwest has been one of the most active acquirers in recent years, cobbling together a number of small deals, mostly outside the Minneapolis company's Midwest region, including in Texas and Nevada.

Charter One Financial Inc., Cleveland, is another active acquirer. Charles J. Koch, chairman and chief executive, predicted 1997 would be a big year for mergers and acquisitions because acquirers could offer attractive prices through stock transactions. Mr. Koch is on the hunt for a thrift or bank in the Midwest or Northeast. Wisconsin and Pennsylvania have particular appeal, he said.

Wachovia Corp. chief executive L.M. Baker Jr. said he, too, is eager to do a deal. Having gone through a restructuring that began in 1992, the Winston-Salem, N.C., company is now ready to be part of the industry's consolidation, he said.

"I do not believe there will only be five big banks in the future, but there will be many fewer, and most of the strongest competitors will be big," Mr. Baker said.

U.S. Bancorp chairman and chief executive Gerry B. Cameron was the only executive at the conference to admit his bank is probably on some other banks' radar screens.

Mr. Cameron said a lot of acquisitions made by his Portland, Ore., company are initiated by the selling party, and he believes most of those banks' shareholders are interested because they'd like to get a "double dip" takeover premium if U.S. Bancorp is bought.

Mr. Cameron said he's been approached about selling but no serious offer had been made. "Everybody's talking to everybody about everything," he said.

At this conference, where the hostile bid for Great Western Financial Corp. by H.F. Ahmanson & Co. was endless fodder for coffee break and cocktail conversation, investors habitually asked companies about their acquisition strategies.

Montgomery analyst Caren Mayer predicted a lot of activity in the fractured thrift industry during 1997. A primary trend driving thrift stocks, she said, is merger talk, and that doesn't seem to be slowing.

One banker reiterated his stand on not doing acquisitions, however.

"We will not do a dilutive deal," said Jerry Grundhofer, chairman and chief executive of Star Banc Corp., Cincinnati. "We will not screw our shareholders.

"If we can do a deal that makes sense for us, we'll do it, but we're not going to do it for somebody else's shareholders. We do not need to do an acquisition to survive."

Likewise, Sovereign Bancorp chief executive Jay S. Sidhu said he applies strict standards to acquisitions: They must be accretive to earnings in the first six months. "I get scared when I hear companies extend the horizon to 18 months," Mr. Sidhu said. "You can have many market changes in that time."

Mr. Sidhu predicted merger activity would heat up in the second half of 1997. A number of banks have been sitting on the sidelines, he said, and slow loan growth would influence companies to either buy or sell.

Not all acquisitions will be of banks, of course. Two money-center banks represented at the conference, BankAmerica Corp. and the Bank of New York Co., said they were interested in buying other types of businesses.

San Francisco-based BankAmerica is looking to acquire a money manager or brokerage, and possibly a leasing business.

Bank of New York wants to take advantage of a consolidating securities processing industry and also wants to build its corporate trust business. When asked whether his bank was considering a hostile bid for State Street Boston Corp., Bank of New York chairman and chief executive J. Carter Bacot denied having such an interest.

He said Bank of New York had increased its stake in State Street Boston because it's a good investment. "All we're trying to do is buy more stock in a good thing," Mr. Bacot said. "Our friends at State Street reacted very violently to this."

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