California’s biggest banking companies have been turning to construction crews instead of investment banking firms to expand in the state.

After several midsize banks were absorbed in a decadelong merger frenzy, some of the bigger players have been building branches in California, though they say they do not have big expansion plans there.

Between April 2000 and last month Wells Fargo & Co. added eight branches and 424 branch positions, a 15% increase. The San Francisco company has 900 California branches and plans to add 14 there this year.

Wells is not alone. Bank of America Corp. plans to add 10 branches in the next 18 months, three of them in California, where it has 960 branches. And Washington Mutual Inc. of Seattle, which is No. 2 in deposits in California, will add three to five branches to its network of 547 in the state this year.

The new branches won’t dramatically increase the size of the companies’ networks. But the trend underscores a growing preference for traditional methods of reaching new customers, particularly when large acquisitions are no longer a viable option.

“We don’t have plans for a large expansion,” said Barbara Robinson, executive vice president for Southern California consumer banking at Bank of America. The company’s branch work force grew 4% from December to April, and it doesn’t expect to match that pace in the future, she said.

But as the population grows and markets change, “we do have in-fill” strategies for the branch network, Ms. Robinson said.

Bank of America, with about $103 billion of deposits, is the largest depository institution in the state. Together, the top three deposit holders in California — Bank of America, Wamu, and Wells Fargo — hold 40% of the state’s $509 billion of deposits.

Because Wamu has been active in acquisitions, opening new branches “is not a priority,” said Michael Miller, senior vice president and group manager for the thrift company’s Northern California consumer bank. But “we do keep looking at new markets and parts of markets where we can add,” he said.

“The problem the bigger banks have is that any large acquisition would involve big divestitures,” said Jim Hill, a Los Angeles investment banker who specializes in community banks.

Wamu jumped to the No. 2 spot in California after buying America Savings Bank, Great Western Financial Corp., and H.F. Ahmanson & Co., with a combined deposit base of $75 billion, in the space of three years.

The twist here is that acquisitions often sometimes force branch closings. Wamu closed about 160 branches in connection with its purchase of Ahmanson’s America Home Savings subsidiary in 1998.

Some observers say California has poor balance: a few very large regional and super-regional banks and many smaller ones. Ninety-five percent of those that have at assets of at least $100 million have assets of $5 billion or less.

But the larger banks in the state, including Wells Fargo, which has been a very active acquirer in other states, are still expected to make acquisitions.

Indeed, Carrie L. Tolstedt, the new president of Wells Fargo Bank-California, says that the company “would love to find banks or financial services companies,” if the fit is good from a market and cultural perspective. Wells could target companies in rural communities where the company does not have a presence, to firms in a metropolitan market where it would like to increase its distribution, she said.

Wells Fargo has stayed clear of California acquisitions since the first quarter of last year, when it bought two community banking companies — a $151 million-asset one in Napa Valley, and a $340 million-asset one in Escondido.

This is partly because of the company has been busy integrating the state’s branches with those of the former Norwest Corp., Ms. Tolstedt said in a recent interview. That process was completed at the end of November, she said. (In 1998 Norwest, of Minneapolis, bought Wells Fargo, moved its own headquarters to San Francisco, and adopted the Wells Fargo name.)

“There was no stated hold on acquisitions, but our focus wasn’t on it,” Ms. Tolstedt said.

For the thrift industry, which was roiled by the state’s real estate crisis in the early 1990s, consolidation has resulted in more thrifts at the higher end of the scale. Eighty-eight percent of the state’s thrifts with over $100 million of assets have at least $5 billion.

While Wamu says it will look at any acquisition prospect that meets its usual criteria, such as helping earnings and having minimum market risk, executives typically mention states like Florida and Texas — not California — when they discuss acquisition opportunities.

Instead, its consumer banking division is concentrating on bringing to California its Occasio branches, which have the look and feel of retail stores. Mr. Miller said the company has selected 10 branches in the state that will get Occasio features, including computer terminals and bookstands.

Mr. Hill, the Los Angeles investment banker, said the problem with building branches instead of buying is that it usually takes longer to turn a profit. “The common rule of thumb is that it probably takes two years before you make money at it.”

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