Midwest banks are ready to rumble.

While professing a healthy respect for NationsBank Corp., bankers across the region said they are undaunted by the prospect of having to compete with the out-of-state giant that swooped onto their turf Friday.

Its deal to acquire Boatmen's Bancshares, St. Louis, would give NationsBank a presence in seven added states, including five - Missouri, Arkansas, Kansas, New Mexico, and Oklahoma - where it would immediately reign as the leader by assets.

But rivals say NationsBank faces heavy work to absorb a banking company with $41 billion of assets and 615 branches. They say they will pick off customers as the merger strains loyalties, which deals of this size so often do.

"It will change our competitive market configuration significantly," said Anat Bird, chief operating officer of Roosevelt Financial Group Inc., St. Louis. "But we're up to the challenge."

"NationsBank is a very strong retail bank," said Gary Hemmer, executive vice president of administration for St. Louis-based Magna Group. However, he continued, "we feel we can compete with the best of the organizations."

Others were relishing the opportunity to vie with an established industry leader.

"I think NationsBank would bring a more sophisticated product mix to the Midwest," said Tyree Miller, head of Banc One Corp.'s commercial banking council. "We compete heavily for business with NationsBank in Texas. Now we'll have a few more states to compete in."

The bounty for competitors will come as NationsBank seeks ways to reduce costs and trim its work force, said Joseph Stieven, an analyst at Stifel, Nicolaus & Co., St. Louis.

"They'll push a good deal of business toward smaller independent institutions," Mr. Stieven said. "Small banks like competing with NationsBank."

While analyst Ben Crabtree of Dain Bosworth Inc. in Minneapolis said community bankers "probably have big smiles on their faces," relishing the chance to profit from market disruption, a sense of caution was evident among those bankers.

Bankers and analysts noted that Missouri had avoided consolidation at the hands of major national players till now.

St. Louis and Kansas City, Mo. - two Boatmen's strongholds - "have been unique banking markets, since no national player has made acquisitions here," said David Kemper, chief executive of $9.5 billion-asset Commerce Bancshares, Kansas City.

The merger partners are both considered strong in middle-market lending - exactly the bread-and-butter businesses Midwest banks thrive on. Boatmen's is also known as a leader in retail banking and trust, while NationsBank is renowned for strength in marketing and product development, observers said.

Mr. Kemper said middle-market business lending is his company's niche and he'll try hard to attract Boatmen's customers. Other bankers said they hope to hire people who jump ship or are thrown overboard by NationsBank. These castoffs are likely to be talented.

"Boatmen's is the plum of the Midwest," said James Weber, an analyst at A.G. Edwards & Sons Inc., St. Louis. "It's the largest franchise between Chicago and Dallas."

He said he expects NationsBank to continue Boatmen's strong reputation for lending to small and midsize businesses. However, most observers said something would be lost with the disappearance of Boatmen's. It was considered the blue-blood bank of St. Louis and had been closely associated with riverboat commerce in the last century.

Despite NationsBank's strategy as a large marketing machine and its proven ability to snatch retail market share, Mr. Hemmer of Magna said he's taking a wait-and-see stance on how best to compete with the giant. For the time being, he said, only the "name on the door will change."

In states such as Iowa, where community bankers have an extremely acrimonious relationship with big banks, bankers said they viewed the arrival of NationsBank as a sign of the times.

"I don't know that it's a fear more than a realization (that) more of these banks are coming into our market," said John Sorensen, senior vice president of the Iowa Bankers Association.

The merger will give NationsBank the No. 1 market share in five major urban markets: St. Louis, Kansas City, Albuquerque, Little Rock, Ark., and Wichita, Kan. It will rank second in Tulsa, Oklahoma City, and Des Moines.

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