NationsBank Corp. has taken heavy fire from Wall Street over the high price it is paying for Boatmen's Bancshares, but some analysts now sense that the deal sends a warning to capital-heavy banks.

NationsBank is financing its acquisition by utilizing Boatmen's mountain of excess capital - a maneuver equivalent to a leveraged buyout, said analyst Diane Merdian of Montgomery Securities in San Francisco.

And that, she said, "should send a clear message to banks with extra capital: Optimally manage your balance sheet or else."

The upshot is that a number of big banks, including some that recently completed their own large deals, might themselves be takeover targets because they have so much unused capital on their books, the analyst said.

"Quite simply, NationsBank was able to offer a higher price for Boatmen's by paying less than 100% of the purchase amount in shares issued, leveraging Boatmen's excess capital as well as its own," she said. "Boatmen's, like any bank, is more valuable optimally leveraged and was consequently made more vulnerable by its excess capital."

In a recent study, Ms. Merdian and colleagues at her firm identified several undervalued banks sporting what she calls "suboptimally leveraged balance sheets." They include First Chicago NBD Corp., Cleveland's KeyCorp, and First Security Corp. in Salt Lake City.

"The industry is growing much faster than banks can deploy their growing capital," noted Adam Compton of Montgomery Securities, who assisted in preparing the study.

More fully valued potential takeover targets, according to Ms. Merdian's analysis, include Mercantile Bancorp., St. Louis; Comerica Inc., Detroit; and U.S. Bancorp, Portland, Ore. The NationsBank-Boatmen's deal offers several important lessons, she said. Among them:

*Bigger is better for buyers. "The greater the dollar amount of the target's excess capital, the more a buyer may benefit, assuming an accretive price is offered."

*Regulatory constraints foster consolidation. Banks with excess capital are generally limited to buying back stock in any year in amounts equal to a year's tangible retained earnings. "An acquirer, on the other hand, can remove significant excess capital all at once," she pointed out.

Industry analyst Judah S. Kraushaar of Merrill Lynch & Co., New York, agreed that excess capital exposes banks to takeover deals.

"The message for any bank is that you make yourself more vulnerable (to takeover) by sitting on excess capital," Mr. Kraushaar said, adding that excess capital would likely be most evident at smaller banks.

Ms. Merdian predicts more merger action but says the NationsBank- Boatmen's deal has not "ignited a massive frenzy" to build enormous banks.

So what are banks to do? Buying another bank is the most obvious way to spend a lot of cash. In fact, one of the banks on Ms. Merdian's list, Mercantile Bancorp., announced this week that it plans to purchase Mark Twain Bancshares for $855 million.

But the most popular means of dealing with excess capital - stock repurchase programs - is unavailable right after a pooling deal.

The Securities and Exchange Commission ruled in March that banks created in pooling-of-interest mergers must temporarily suspend their buyback programs.

In pooling transactions - the kind that Mercantile is using to buy Mark Twain - the acquired bank's assets are added into the parent's.

In contrast, Wells Fargo & Co., San Francisco, this year took over First Interstate Bancorp., Los Angeles, using the purchase-accounting method, which preserves stock buybacks.

In purchase transactions, the newly acquired bank is treated as an investment and its assets are incorporated into its new parent's balance sheet at their fair market value.

The downside is that any price paid over their fair value is considered goodwill and must be written off against future earnings.

Although purchase accounting makes for more cumbersome bookkeeping and can depress bank earnings, Ms. Merdian says it is the only alternative in the current environment.

"Poolings of interest are essentially dead for banks, as they too severely inhibit managements' flexibility in appropriately managing capital," Ms. Merdian wrote.

The NationsBank deal for Boatmen's is also a purchase accounting deal - the second big one this year, after Wells-First Interstate.

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