With two major acquisitions in the last six months, St. Louis-based Boatmen's Bancshares has established itself as the most aggressive, and perhaps the canniest, acquirer in the central Midwest.

The region's economic climate is relatively good, and the competition for healthy franchises - at least so far - is relatively weak.

In the early and mid-1980s, Boatmen's expanded aggressively but at the cost of diluting shareholder value.

Since 1987, the $16.2 billion-asset Boatmen's has made five major acquisitions, all accretive, building shareholder value.

Just two months after it expanded into Oklahoma with the acquisition of First Interstate of Oklahoma, Boatmen's moved into Iowa, announcing Oct. 11 a definitive agreement to acquire $1.2 billion-asset First Interstate of Iowa for $136 million, or 123% of book value, far below the frenzied pricing of franchises in nearby Midwest states.

Des Moines a Target

About half of First Interstate's assets are in the Des Moines area, another desirable urban market, and further Boatmen's acquisitions in that market can be expected.

"Des Moines is a very attractive market to us," Boatmen's chief financial officer James Kienker said.

When the performance is up to snuff, Boatmen's likes to keep management talent on board.

In Oklahoma, it retained Ken Townsend as First Interstate's chief executive, and it has already announced that First Interstate of Iowa's senior management would stay, a move that should allow Boatmen's to hit the ground running in Iowa after the acquisition.

Boatmen's hasn't made any hard decisions on how to consolidate the Iowa operation, but Mr. Kienker said the acquisition promises significant opportunities for cost savings.

The target number for cost savings is $10 million over the first three years, Boatmen's secretary Philip McCarty said.

Internal Efficiency Improves

The cost savings Boatmen's achieves would be enhanced by First Interstate's own internal consolidation, a process it began more than a year ago to realize further efficiencies.

Since then, First Interstate has reduced the number of banks it operates in the state to 10, from 13 in 1990, without reducing the number of offices it operates.

Boatmen's, the nation's 11th-largest provider of trust services with about $30 billion of assets under management, also plans to expand First Interstate's trust services and add consumer products, enhancing revenue by $2 million in the first two years of the acquisition.

"We're not interested in small banks," said Mr. McCarty. "We want to expand into population centers and go in with either a [Top Three] market share or to enhance our share in an existing market.

"We also have a very low risk tolerance in acquisitions: minimal asset risk, minimal change in loan intake, minimal operational risk (especially in consolidating data processing), and a portfolio that matches our existing business."

"Probably the most important guidepost in our acquisition strategy," said Mr. McCarty, "is that we will tolerate only modest, if any, dilution. This precept - minimal dilution - practically dictates a modest multiple.

"I cannot cite a magic formula as to what constitutes 'modest,' but it is fair to say tht Boatmen's is not likely to pay a substantial premium for book value or earnings, absent very unusual circumstances."

Boatmen's will, according to Mr. McCarty, be looking for other acquisitions in Iowa as soon as (if not before) the First Interstate deal is closed.

Mr. McCarty cautioned, however, that Boatmen's interest is not the only factor at play in the mergers and acquisitions game: "It takes a willing partners."

Other States Being Checked

Iowa isn't kthe only state put on the Boatmen's watch. "We're interested in all contiguous states to Missouri and may expand into selected noncontiguous states," mr. McCarty said. "We consider the whole central U.S. to be our trade area."

Eight states are contiguous to Missouri, and Boatmen's already has a franchise - or one in the works - in four: Illinois, Oklahoma, Tennessee, and Iowa.

That leaves Nebraska, Kentucky, Arkansas, and Kansas as potential virgin territory for Boatmen's.

Boatmen's probably isn't the only acquirer looking at Iowa. Three other healthy franchises exist in the Hawkeye state: Brenton Banks, with $1.2 billion in assets; Hawkeye Bancorp., $1.3 billion; and Iowa National Bankshares Corp., $900 million.

Considering the comparatively attractive pricing of Iowa franchises, any one of them might be asked to the dance.

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