In Evansville, Ind., homegrown banks are still king.

That's unusual because all across the state, scores of local banks have been acquired by out-of-state regionals ever since Indiana's branching and banking laws began easing up a decade ago.

Since 1985, the number of Indiana-based commercial banks has dropped to about 240 from 412. Even Indianapolis' three largest local banks have been acquired by regionals in recent years.

But Evansville is different. It is home to three of the strongest bank companies in the state. And with their high price-to-earnings multiples, analysts say, they are unlikely to be acquired anytime soon.

Evansville, with a metro area of nearly 279,000, is dominated by the two largest in-state bank companies, $4.1 billion-asset Old National Bancorp, which owns 21 banks in Indiana, Illinois, and Kentucky, and $2.6 billion- asset CNB Bancshares, which operates eight banks in the same area. Third in the market is $770 million-asset National City Bancshares, with nine banks in the tri-state region.

"In the Midwest, I don't think you can find communities of that size that don't have the presence of a significant (non-local) player," said John J. Harris, a managing director at the Chicago Corp. "It's really a unique situation."

The big three stress their local ties in the formal names of their lead banks: Old National Bank in Evansville, Citizens National Bank of Evansville, Indiana, and National City Bank of Evansville.

Together, those three control about 62% of the metro area's deposits, according to Sheshunoff Information Services Inc.

The only big regional in town, Detroit-based NBD Bancorp, is about sixth in the market, after acquiring Indianapolis-based INB Bancshares in 1992.

Evansville has avoided a regional invasion for several reasons, bankers and analysts said. For one, the companies' price-to-earnings ratios all tend to be high.

As of Wednesday afternoon, National City was trading at $43.25, or 17.8 times earnings; Old National at $34.50, or 16.6 times earnings; and CNB at $29.50, or 15.2 times earnings, according to Jeffrey L. Davis, an analyst with Raffensperger, Hughes & Co. in Indianapolis.

"That simply is too expensive for most banks to acquire," said James Giancola, CNB's president.

The companies' high stock prices don't move with the general market, Mr. Harris said. They have performed well, but so have other bank companies that don't trade at these levels.

"That's a little mystery to me," Mr. Harris said.

A consistently stable economy and conservative management have played a role in the banks' performance, too, said John D. Lippert, chairman and chief executive of National City.

None of the three banks "get into the things that cause problems," he said. "We're collectively very cautious bankers."

Plus, Evansville's location as a hub for the region between Indianapolis, Louisville, and St. Louis has made the banks self-sufficient.

"We're an island unto ourselves," Mr. Lippert said. The three banks also are active acquirers in southern Indiana, southern Illinois, and western Kentucky.

"We don't like to stray too far from home," said John Royse, chairman and CEO of Old National, which has three pending acquisitions totaling $360 million of assets.

CNB is expected to reach $3.6 billion later this year, upon the completion of several deals, Mr. Giancola said. And completion of two pending mergers would leave National City just shy of $1 billion by the third quarter, Mr. Lippert said.

If any of the three were affordable, they might be acquisition targets, Mr. Harris said. "There are a lot of companies who would like to be in Evansville," he said. "The valuations in these stocks make it very difficult for another company to come in."

The top three Evansville banks say they don't want to sell.

"We have not been interested in being acquired," said Old National's Mr. Royse.

Added CNB's Mr. Giancola: "We'll continue to be an independent bank as long as we continue to provide shareholders a good return."

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