CHICAGO -- Minneapolis-based Metropolitan Financial Corp. on Monday set the stage to move West, agreeing to buy a healthy thrift in Wyoming for about $64.2 million in cash.
Metropolitan said it would buy Rocky Mountain Financial Corp., parent company of a Cheyenne-based savings bank that has $559 million of assets. The deal is expected to close in the first quarter of 1994.
The purchase will increase Metropolitan's asset base by 8%, to about $7.6 billion, and extend its presence to eight states.
Other Moves Weighed
The deal also provides a springboard for the thrift's plan to further expand from the upper Midwest into the Rocky Mountain states, according to Stephen R. Schroll, a thrift analyst with Piper, Jaffray & Hopwood, Minneapolis. Metropolitan had told analysts it will consider moves into Colorado and Montana.
Analysts who follow Metropolitan said they were comfortable with the price being paid for Rocky Mountain Financial. Metropolitan's purchase price translate into 152% of book value, or 12 times the prior 12 months' earnings.
"That is within the bounds of conservative pricing," said Bruce Harting, a thrift analyst at Salomon Brothers Inc.
On Monday afternoon, Metropolitan's shares rose 25 cents to close at $16.875.
A Solid Institution
Rocky Mountain Financial, which operates 14 branches in Wyoming and a loan-production office in Colorado, boasts excellent credit quality and solid profitability. Its problem assets amounted to a slim 0.35% of total assets at June 30, while its return on assets over the last 12 months amounted to 1.05%.
"Rocky Mountain Bank is a strong, well-managed financial institution," said Norman M. Jones, chairman and chief executive of Metropolitan.
Mr. Jones indicated that Metropolitan would seek to retain Rocky Mountain's management team.
Metropolitan officials estimated the deal will increase earnings per share between 10 cents and 15 cents in the first year following completion of the transaction.
Metropolitan told analyst it will book about $22 million of goodwill as a result of the cash acquisition. The accounting entry, representing purchase premiums above market value, is written off as a noncash charge to earnings over several years.
Seeking Bank Targets
Metropolitan is one of several healthy thrifts that continue to expand in spite of their own relatively weak stock trading multiples. Indeed, William Bartkowski, an executive vice president of Metropolitan, reiterated the company's desire to buy some commercial banks as part of its empire.
The thrift's shares, meanwhile, have been trading at 111% of book value, or 10 times its prior 12 months' earnings. That contrasts with multiples to book value of more than 250% at Norwest Corp. and more than 185% at First Bank Systems. The two bank companies are based in Metropolitan's home town.
As a result, speculation has been sparked among some analysts that Metropolitan itself could be vulnerable to takeover.