Compass Bancshares, applying its formula of building through acquisition in fast-growing markets, is pushing further into Denver.
The Birmingham, Ala., company on Tuesday announced an agreement to buy Firstier Corp. for $127 million in stock. The deal is the latest in a series strung together by Compass over the last two years to magnify its presence in metropolitan areas in Colorado, Arizona, and New Mexico.
Facing tough competition for deposits and middle-market corporate business in the Southeast and slower economic growth in the region, the $19 billion-asset banking company has been trolling mainly Sun Belt markets for small acquisitions in booming urban centers where it can quickly establish itself. Together with an earlier acquisition, the Firstier deal will boost Compass' deposits in Denver above $1 billion.
The deal "is consistent with our strategy of acquiring well-managed, profitable banks in high-growth, high-opportunity markets," D. Paul Jones, chairman and chief executive officer of Compass, said in a statement.
Compass entered Denver in April by completing its acquisition of MegaBank Financial Corp., a company with $300 million of assets and nine branch offices in that city. Firstier is far bigger, with $880 million of assets and 19 branches, 17 of them in and around Denver.
Also this year, Compass completed deals for $285 million-asset Western Bancshares of Albuquerque. This summer it completed the purchase of $390 million-asset Founders Bank in Phoenix, building on its late-1998 purchase of $805 million-asset Arizona Bank.
Analysts said the progress in the West mirrors Compass' foray into Texas in the mid-1990s. Then, Compass cobbled together several deals to get established in Houston, Austin, Dallas, and San Antonio. In Texas, as in the Western states, Compass repeatedly has come up against the same list of much larger competitors, including Bank of America Corp., Wells Fargo & Co., and Bank One Corp.
Still, analysts said, Compass shows no signs of slowing down. "This is exactly what they aim for," said Robert Patten, an analyst at UBS Warburg. "They are looking for metro-market coverage, where a lot of the development and deposits reside."
Analysts said the company would likely continue to make small "fill-in" deals, especially in Arizona and New Mexico. Ed Bilek, director of investor relations for the company, would not comment on what moves the company might make next, but he said urban markets in places like Arizona and Colorado are growing at two to three times the national average, a fact that tends to entice Compass to take a closer look.
California has many of the same growth characteristics "but, there are a lot more banks there," Mr. Bilek said.
The deal calls for Compass to exchange 6.8 million shares of its stock for shares of Firstier, and the price is based on Compass' closing stock price Friday. It needs regulatory and shareholder approval and is scheduled to be completed in the first quarter of next year.
Mr. Bilek would not offer specifics on the integration plans. Firstier is a privately held company run by a father-son team, Joel H. Wiens, chairman, and Timothy D. Wiens, chief executive and president.
Deposit market share data as of June 30, 1999
(Dollar amounts in thousands)
|Rank||Institution||Inst. Type||Number of Branches||6/30/1999 |
Total Deposits ($)
|1||Wells Fargo & Co.||HC||118||9,114,642||17.27%|
|3||Firstbank Holding Co.||HC||110||3,671,679||6.96%|
|4||Golden West Financial Corp.||HC||76||3,308,692||6.27%|
|5||Bank One Corp.||HC||51||2,420,632||4.59%|
|6||Commercial Federal Corp.||HC||44||2,182,088||4.13%|
|8||Community First Bankshares||HC||48||1,359,112||2.57%|
|9||First National of Nebraska||HC||16||1,183,810||2.24%|
|10||ENT Federal Credit Union||CU||1||1,040,752||1.97%|
|36||Compass Bancshares, Inc.||HC||9||235,009||0.45%|
Source: BankSource - Sheshunoff Information Services