Fourth Financial to purchase Equity Bank in Oklahoma.

In its third deal in two weeks, fast-growing Fourth Financial Corp. agreed on Wednesday to pay $93 million in cash to acquire Oklahoma City-based Equity Bank.

Fourth Financial chairman Darrell G. Knudson said that once the deal is completed next spring, his Wichita, Kan.-based company would have $2.3 billion of assets in the heavily fragmented Oklahoma market. The Equity deal would add about $350 million in assets.

The company's Bank IV Oklahoma subsidiary will become the third-largest bank, with about 8% of the state's assets. After a two-year buying binge there, Fourth ranks just behind $2.4 billion-asset Liberty Bancorp. and BOK Financial Corp., which has a market-leading $2.88 billion in Oklahoma assets, according to Ferguson & Co.

Smaller Banks Targeted

But those rankings could change next year. In an interview, Mr. Knudson said smaller Oklahoma banks will be the main focus of his acquisition program in 1994. With a goal to add up to $2 billion in assets annually, the bank has nearly doubled its size to $7.8 billion in assets since 1990.

"We'll keep acquiring as long as the market is friendly to us," the executive said in a telephone interview from the Oklahoma bank.

"I would say that 60% of our attention is in Oklahoma and 40% is in Missouri."

Last July, Fourth agreed to acquire Great Southern Bancorp., a $499 million-asset thrift in southwestern Missouri, in a deal expected to close in the first quarter.

Mr. Knudson said he wants to build around his Springfield, Mo., base but does not rule out acquiring banks as far north as Kansas City.

But there is little prospect for a Great Southern-size deal.

"For us to go out and buy something one-third our size is something we are not prepared for," he said. "We are most skilled at integrating those $150 million-asset banks."

Buying smaller, in-market banks is exactly what Fourth has been doing after a four-month lull. In mid-November, the company said it would acquire a $260 million-asset bank in Hutchison, Kan., from Emprise Financial Corp. Terms of the deal were not disclosed.

Dodge City Deal

On Nov. 18, Fourth said it agreed to acquire two banks from First Dodge City Banc-shares in a stock swap valued at $17.4 million.

In the pending deal, the company would acquire First National Bank and Trust Co. in Dodge City, which has $108 million in assets, and Metro Bank of Broken Arrow, an Oklahoma bank with $42 million in assets.

In the deal announced on Wednesday, Fourth agreed to acquire Equity Bank, which is a subsidiary of LSB Industries Inc. The complex arrangement will give the Kansas bank $340 million of core deposits, $162 million in loans, a $200 million mortgage servicing portfolio of multifamily loans, and a mortgage banking network expected to originate $100 million in loans this year.

The deal will include 14 branches in the Oklahoma City market, a credit card division with 90,000 customers, and taxloss carry-forwards totaling $64 million. Mr. Knudson said the transaction will result in goodwill and other intangibles of approximately $20 million.

The purchase price represents about 1.4 times book value of the Equity Bank assets. Analysts said the price appeared to be fair.

A Leading Acquirer

Since the expansion-minded Mr. Knudson joined Fourth in 1990, the company has consistently ranked among the most active acquirers in terms of numbers of deals. SNL Securities consistently ranks the company as one of the top five acquirers in the nation.

As of Wednesday, Fourth had announced nine deals in 1993 to acquire assets totaling $2.15 billion.

But the fast-growth strategy has not been without costs. Fourth's companywide efficiency ratio continued to creep up, reaching 68% at the end of the bank maintains a respectable 61% ratio, recently acquired banks operate as much as 10 points higher.

Tackling Overhead

"Fourth knows it has to address this overhead issue very quickly," said Joseph Stieven, senior bank analyst at St. Louis-based Stifel, Nicolaus & Co.

Mr. Knudson said that as much as 6% of Fourth's higher costs are acquisition related, and he agreed that lower overhead expenses were essential.

"If we were to stop acquiring banks, that cost would go away," he said.

"We're not satisfied that [the efficiency ratio] number is where it needs to be."

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