Jefferson Savings Bancorp's first leap outside its St. Louis market isn't to another part of Missouri, but to Texas.
The $770 million-asset company reached a definitive agreement to acquire First Federal Savings Bank of Longview, Tex., for about 1.2 times book value or $12.8 million.
"Bottom line is this appears to be a very clean, well-run savings and loan," said Jefferson Savings' chief financial officer Paul J. Milano of $130 million-asset First Federal, which operates five offices in northeast Texas. "Texas is an expanding economy. It's recovering, it's strong. Longview appears to be a stable and growing area."
Wayne Bopp, a thrift analyst with Stife, Nicolaus & Co., St. Louis, likes the deal but said the distance between Ballwin, Mo.based Jefferson Savings and First Federal could pose some challenges.
"It's not exactly in a contiguous market," he said. Acquiring a bank far from its nine metropolitan St. Louis locations means Jefferson Savings will lose economies of scale in areas like advertising, he said.
However, Mr. Bopp believes the deal will work because Jefferson isn't making major changes at the Texas bank. And besides the location, "This acquisition involves all the characteristics of a good acquisition: a cheap price, a good market, and a good track record."
But, he added, "If their next acquisition is in Montana and their third in Virginia, you'd start to wonder."
Mr. Milano wouldn't speculate On munbers or locations of future acquisitions except to say, "We would certainly be interested in other opportunities in Texas."
He indicated that Jefferson Savings has plenty of capital to deploy. Before the thrift converted from mutual to stock about a year-ago, capital was at 7.5%, he said. Afterward, it shot up to more than 15 %.
The Texas deal is the first acquisition since the holding company was formed in conjunction with the conversion.
Under the terms of the Longview agreement, Jefferson Savings-will purchase all of Longview's outstanding stock for-about $32 per share, subject to adjustments.
The cash transaction awaits regulatory approvals and is expected to be completed during first-quarter 1995.