The long-awaited consolidation of Missouri banks is in high gear, and observers find themselves wondering aloud what banking company will be merging next.

Last week Mercantile Bancorp., with $18.2 billion of assets, said it would buy $3.1 billion-asset Mark Twain Bancshares for stock worth about $855 million.

The announcement came less than two months after Charlotte, N.C.-based NationsBank Corp. said it would buy $41 billion-asset Boatmen's Bancshares, Missouri's largest banking company.

Those deals "could speed up the consolidation," said James Weber, an analyst with A.G. Edwards & Sons Inc. in St. Louis.

All five of the state's biggest independents after Boatmen's are likely candidates for sale over the next year, analysts say.

At the top of this list is Mercantile, which could help some big regional banks, such as Banc One Corp., First Bank System Inc., Norwest Corp., and First Chicago NBD Corp., expand further in the Midwest.

Mercantile's "shelf life is pretty short," because earnings have been below expectations this year, said analyst Michael Durante of McDonald & Company Securities in Cleveland.

"I don't want to put a time line on it," he said. "Two years is too long. Two weeks is too short."

The other four companies on the top-five list are $9 billion-asset Roosevelt Financial Group Inc. and $5.4 billion-asset Magna Group Inc., both of St. Louis, and $9.4 billion-asset Commerce Bancshares and $6.1 billion-asset UMB Financial Corp., both of Kansas City.

Though analysts agree that there will be more mergers and that Mercantile is the most attractive target, they disagree on the influence of the Boatmen's deal.

Because Boatmen's is a huge franchise and holds the No. 1 deposit position in five states, the desire to get into Missouri alone is not what drove NationsBank to buy it, said Anthony Polini, an analyst with Advest Inc. Nor would it have driven Banc One to do so, he said.

On the other hand, the two largest Minnesota banks, First Bank System and Norwest Corp., would like to be in Missouri.

A year ago, Mark Twain announced that it was in merger talks with an unnamed partner. Mr. Polini said that he believes the partner was First Bank, and that it walked away from the opportunity to bid on First Interstate Bancorp.

If First Bank and Norwest are still interested in moving into Missouri, they might be interested in Roosevelt, Mr. Polini said. The thrift company, which is in the midst of a major business realignment to transform itself into a retail bank, would be vulnerable to takeover and at a cheaper price than a commercial bank.

The most logical deal, however, would be an in-market merger between Magna and Roosevelt, Mr. Polini said. Besides the opportunity to boost returns on assets and equity and improve earnings, he said, the combined organization would be yet another attractive takeover candidate.

What has surprised most analysts is that Mercantile hasn't already been bought.

Mr. Polini said he believes Mercantile's chief executive, Thomas H. Jacobsen, would prefer a marriage to First Chicago, where he started his career and still has personal ties. First Chicago spokesman Thomas Kelly said that the bank would not comment on possible merger deals, but that it is interested in entering Missouri.

The Kansas City banks are less attractive to potential buyers, Mr. Polini said.

Commerce is one of the best-run companies in the country and would fetch a top price, but will be sold only if chief executive David Kemper gets the right offer, Mr. Polini said.

UMB, which has little market share in St. Louis, has been adamant about not selling. "UMB is poorly managed and ineffective," Mr. Polini said. "Its fate lies in (chairman) Crosby Kemper's hands." David Kemper and Crosby Kemper are cousins.

Magna, on the other hand, is another attractive company that could offer market share in Missouri, Illinois, and Iowa. Mercantile operates in those states as well as Arkansas and Kansas.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.