Hoping to ride the consolidation wave, a year-old Kansas bank holding company is offering to help others find prospective targets or buyers.
In January $27.5 million-asset Commercial Guaranty Bancshares, Overland Park, opened an investment banking company, CGB Capital Corp., that will cater to closely held community banks in the Midwest.
CGB Capital was started because the region's merger activity will be dominated by tiny banks that the larger investment firms overlook, said Thomas E. Bishop, chief executive officer of the holding company.
"There is demand for M&A talent and ability in the Midwest," he said in an interview.
Mr. Bishop, a 22-year banking veteran, knows a thing or two about consolidation. In 1993 he sold Parkway Bank, which he had founded in 1989, to Mark Twain Bankshares for $8.7 million, or 3.2 times book value.
He also once worked on the acquisition team of Commerce Bancshares, Kansas City, Mo.
But cracking the market won't be easy, said Jerry Swords, president of Swords Associates Inc., a Kansas City, Mo., consultancy that will be vying with Mr. Bishop.
Though Mr. Bishop's reputation will be a valuable asset, many companies, including legal and accounting firms, already cater to community banks, Mr. Swords said.
What's more, he said, community banks tend to be loyal, leaving the party with whoever brought them.
CGB Capital's marketing material stresses the banking background of Mr. Bishop and his lieutenants as reasons to choose it.
"We are banking specialists who sit on the same side of the table as you," a brochure says.
The unit, funded by a $3 million capital offering in December, hasn't yet closed a deal, but Mr. Bishop said it is talking to companies in Colorado, Illinois, Indiana, Iowa, Kansas, Missouri, Nebraska, Oklahoma, and Texas.
So far the ripest markets appear to be Missouri and Kansas, where the recent acquisition of Boatmen's Bancshares has altered the competitive landscape, Mr. Bishop said.
Indeed, Mercantile Bancorp., St. Louis, bought Mark Twain Bankshares, the acquirer of Mr. Bishop's old bank, in direct response to NationsBank's entry into the Midwest.
Oklahoma seems to be the toughest market, because of restrictive branching laws, Mr. Bishop said.
When it comes to mergers, CGB Capital will focus on banks with $250 million to $500 million of assets that are looking to buy banks with up to $250 million of assets.
"Once you get about half a billion you're generally dealing with publicly held companies," Mr. Bishop said.
CGB Capital also will offer help to community banks that want to buy branches from larger holding companies, and it will advise on chartering, corporate restructuring, and management.
