Several acquisition-minded national banks have made overtures to Mark Twain Bancshares, chairman Alvin J. Siteman of the St. Louis banking company said Tuesday at a New York investor conference.
The news sent Mark Twain's shares soaring initially, though the stock settled back slightly by the end of the trading day. The stock finished up 75 cents to close at $28.25, after being up by as much as $1.625.
Mr. Siteman told Piper Jaffray's financial institutions conference that the unnamed banks had expressed an interest about moving into Missouri, a state whose restrictive banking laws will be overturned next year under the recently-passed interstate banking bill.
Analysts named Banc One Corp., NationsBank Corp., NBD Bancorp and Norwest Corp. as likely suitors.
Any acquirer, however, would have to pay well in excess of two times book value, said Joseph A. Stieven of Stifel, Nicolaus & Co. Mark Twain shares currently trade at roughly 200% of book value, well above Stifel's 159% average for its universe of Midwestern banks.
"Whomever they choose to marry will have to be another very high performing institution with a strong track record so that Mark Twain investors can get a security with a very strong underlying value," he said.
Stock prices of Banc One and other would-be buyers have plunged in the recent bank stock downturn, and as a result these banks have idled their merger and acquisition engines.
Mr. Stieven called Mark Twain one of the best-performing banks in his universe, with a return on average assets above 1.50%.
As a result, squeezing efficiencies out of the bank would be difficult. Mark Twain's efficiency ratio is 55%, so profits would have to come from Steamrolling retail products through the branch system, added Kristine Pavel of Chicago Corp.
If the bank does eventually sell for over two times book, Mr. Siteman, who does not hold an executive position at the bank, would profit handsomely from the deal. He owns 15.6% of the common shares outstanding.
With the stock market rallying, BankAmerica Corp. shares were up 62.5 cents, to $42.875. Keystone Financial Corp gained $1.125, to close at $29.375 in heavy trading. J.P. Morgan & Co. rose 75 cents to $61.375.