Having already agreed to buy a troubled European rival and been stung by rising credit costs in the United States, the French banking company BNP Paribas SA is sounding cooler on U.S. acquisitions than it did a few months ago.

Executives at the parent company in Paris and its BancWest Corp. unit in San Francisco said after BNP released its third-quarter results — which were dragged lower by U.S.-related credit hits — that they are being cautious in the near term.

If "a compelling transaction presented itself we'd look at it," but acquisitions are "not a primary focus right now. … We're all very concerned about where the economy is going," Don J. McGrath, BancWest's chairman and chief executive,, said in an interview Wednesday.

In August, BNP Paribas CEO Baudouin Prot had said he expected BancWest to continue to grow, possibly through acquisition. That same month, Michael Shepherd, the CEO of Bank of the West, BancWest's primary bank, said the San Francisco operation was pondering acquisition possibilities.

But in an online video presentation Wednesday, Mr. Prot said stock market losses and economic doldrums in September had a "strong impact" on the bottom line at BNP Paribas, whose $18.4 billion deal for the struggling Fortis NV, a Belgian-Dutch financial services company, is set to close next month. Though he did not specifically discuss major growth plans in the United States, Mr. Prot said his company's emphasis now is on monitoring risks "very closely."

Bank of the West posted a steep decline in third-quarter profit. BNP said its broader investment banking exposure to the U.S. credit crunch helped pull its parent's third-quarter profit down 56% from a year earlier, to $1.15 billion. BNP said it lost $1.4 billion because of the global financial crisis.

Its earnings release partly blamed exposure to Lehman Brothers Holdings, which collapsed during the third quarter.

Mr. McGrath said there are signs California's housing woes are easing, "but I don't think I'd characterize it as improving." He said loan-loss reserves likely would remain elevated into next year, citing "systematic credit deterioration."

The sputtering U.S. economy and California's housing slump forced BancWest to raise Bank of the West's loan-loss provision by 50% from a year earlier, to $136 million.

Its profit sunk 94%, to $8.1 million. A $140 million impairment against its securities portfolio — primarily related to Fannie Mae and Freddie Mac preferred securities — were another blow to earnings.

A key strength of Bank of the West, agriculture lending, also faces new threats.

The bank has expanded its agriculture lending business more than 50% in the past four years, to more than $4 billion, and Mr. McGrath said the business remained strong in the third quarter and that he expects it to have a strong fourth quarter.

But with ethanol prices plummeting in October, and ethanol producers struggling to cover their costs, corn farmers who have profited handsomely on selling their corn at lofty prices for ethanol production are starting to worry that demand for agriculture loans will taper off in the year ahead, economists said.

The Midwest economy, where most farm lending outside of California is concentrated, "is now in a recession and I expect the downturn to deepen in the months ahead," Ernie Goss, an economist at Creighton University in Omaha, wrote in a research report published Monday.

Mr. Goss surveys Midwest bankers and business leaders monthly. His survey of confidence in the Midwest economy, measured on a 100-point scale, plunged to a 14-year low of 39.9 in October, partly because of the expectation of a weakening farm economy.

The $63.7 billion-asset Bank of the West, however, said its core banking business remains strong, with a Tier 1 capital ratio of 9.24%.

Its third-quarter net loans and leases totaled $46.1 billion, up 11% from a year earlier. Deposits rose 4%, to $38.7 billion, and assets rose 7.1%.

Mr. McGrath noted that BancWest's other U.S. bank holding, the $12.8 billion-asset First Hawaiian Bank , which is based in Honolulu, reported last week that its third-quarter profit rose 6% from a year earlier, to $55.4 million, driven by 24% loan growth. Mr. McGrath said the bank benefited from a flight to quality.

"First Hawaiian had a really special quarter," he said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.