Amid speculation that it is the next takeover target in St. Louis, Allegiant Bancorp Inc., trying to preserve its independence, has begun a top-to-bottom review of operations.
The $2.2 billion-asset company, which has nearly tripled its size since 1999, will spend the next two years evaluating each department and identifying ways to improve efficiency and generate stronger internal growth. Thomas A. Daiber, Allegiant's chief financial officer, said the aim is to provide the best return to shareholders, which he calls the best argument for remaining independent.
"Right now our story is to be St. Louis' bank," Mr. Daiber said.
Speculation about an Allegiant sale has been swirling since Marhsall & Ilsley Corp. of Milwaukee announced in June that it was buying Mississippi Valley Bancshares Inc., also of St. Louis.
Andrew N. Baur, Mississippi Valley's president, who will head Marshall & Ilsley's St. Louis operations, has made no secret of its desire to bulk up there further. Though he did not name names, analysts have speculated that Allegiant is the most attractive target.
In fact, it is one of the few targets of any size left in St. Louis. Out-of-town companies such as Bank of America Corp. and Union Planters Corp. have bought most of the city's largest banking companies in the last few years.
Mr. Daiber said that Allegiant's board is focused on generating internal growth and presenting itself as St. Louis' hometown bank, but "as a public company, you can never really say you're not for sale."
One of the objectives of Allegiant's review, called Project 2004, is wringing additional cost savings out of its recent acquisitions. It bought the $300 million-asset Equality Bancorp in November of 2000, the $776 million-asset Southside Bancshares Corp. in September 2001, and Guardian Savings Bank's five Missouri branches, with $109 million of assets, in December.
Allegiant also bought Investment Counselors Inc., a St. Louis asset management company, this year and expects to integrate it before yearend.
"We've gone through three [bank] acquisitions in the past 21 months," and now Allegiant will be "taking a look at those and seeing how we can better fine tune and use those systems," Mr. Daiber said.
The company bought Southside in part for its trust department, and after integrating the department, officials discovered that it was actually more profitable and efficient than they thought. Allegiant's own trust department is now modeled after Southside's, and Allegiant is searching for similar discoveries in its review.
It has also spent $250,000 on a customer relationship management system that will allow it to cross-sell products more effectively to existing customers as well as develop more competitive pricing, according to Mr. Daiber.
Another goal of the review is to help Allegiant maintain double-digit revenue growth in the St. Louis market, where the local economy typically grows by 1% to 2% per year, he said. The company also hopes to lower its efficiency ratio by almost 5 percentage points, to around 50%.
Excluding the acquisitions, Allegiant's earnings have grown at about 19% per year over the last three years, but "the bigger you get, the harder that growth is to maintain," Mr. Daiber said.
Joseph A. Stieven, the director of financial institutions research at Stifel, Nicolaus & Co. in St. Louis, said that Allegiant is well-positioned to gain market share in the city.
"When your competitors are companies like Bank of America and U.S. Bancorp, a company like Allegiant has a lot of room" to compete, he said.
The company is probably conducting the review not in response to any performance problems, but to deal with its recent growth, Mr. Stieven said. "I think they came up with the plan because they make these acquisitions and are now saying, 'Let's see what we can do with this.' "
