Interstate Merger Prospects Proliferate in Wild West
Bank stock investors can choose from two different merger menus these days.
Though bank combinations within markets are the prevailing trend in the eastern half of the nation, interstate deals are most likely in the West.
"Clearly the most attractive possibilities in the West are multistate and may soon involve entrance of major buyers headquartered outside the region," said Donald K. Crowley, a bank analyst in San Francisco for Keefe, Bruyette & Woods Inc.
The most likely outsiders are KeyCorp, Albany, which already has a foothold in a number of markets; Norwest Corp., Minneapolis, which recently bought a major presence in Colorado; and two perennials on any list of likely acquirers: NCNB Corp., Charlotte, N.C. and Banc One Corp., Columbus, Ohio.
The most likely sellers, he said, are two regional banks in Denver - Affiliated Bankshares of Colorado and Colorado National Bankshares - and Sunwest Financial, Albuquerque, N.M.
National Bancorp of Alaska, Anchorage; Puget Sound Bancorp, Seattle; and Zions Bancorp., Salt Lake City are not as likely to be sold.
No Deal Is Expected
As for Valley National, Mr. Crowley noted its reported discussions with Norwest, but said he is "skeptical that a deal will be forthcoming soon."
Multistate transactions are more likely in the West because the region has already experienced so much in-market consolidation. That trend dates from the first half of the century, the era of Bank of America founder A.P. Giannini, and accelerated in the past decade.
Mr. Crowley noted that there were six sizable independent banks based in Washington state a decade ago. Today, only Puget Sound remains independent.
Few Left in Arizona
Similarly, there were then six major unaffiliated Arizona banks, but only Valley National Corp., Phoenix, remains. In Colorado, a roster of five banks has been cut to two.
Of course, the largest bank in the West considered a potential seller is First Interstate Bancorp, Los Angeles. Speculation continues that it will be acquired by Wells Fargo & Co., San Francisco, in the aftermath of the year's most stunning merger announcement, a combination of BankAmerica and Security Pacific Corp., Los Angeles.
Mr. Crowley believes the probability of a deal between Wells Fargo and First Interstate is less than 50% since it would mean a titanic clash of corporate cultures between "lean and tight-fisted" Wells Fargo and the "collegial and tolerant" First Interstate.
But should it happen, he thinks First Interstate operations in Utah, Idaho, Colorado, Oregon, Washington "and perhaps elsewhere" might be sold. That in turn might stimulate a rash of interstate deals in the West.