SAN FRANCISCO -- Norwest Corp. has agreed to buy Independent Bancorp of Arizona for about $158.6 million in cash, a deal which, if completed, will, end the brief but tumultuous saga of the largest start-up in U.S. banking history. When Combined with another pending acquisition, the purchase will nearly double the size of Norwest's Arizona operations to 103 branches and roughly $4 billion of assets, solidifying its position as the fourth-largest bank in the state. But some analysts question the quality of $1.8 billion-asset Independent and its operating unit, Caliber Bank. The Phoenix-based institution was cobbled together in 1992, mostly from failed savings and loan branches discarded by BankAmerica Corp. as part of its acquisition of Security Pacific Corp. "The franchise is awful," said Lehman Brothers' Mark Lynch. "It is all the branches BankAmerica didn't want." What's more, Independent is selling under distress. At the same time the company announced its agreement to sell, it disclosed approximately $50 million in realized and unrealized losses in its roughly $500 million portfolio of mortgage-backed securities.

Norwest has a record of buying and fixing troubled banks. Jon Campbell, president and chief executive of Norwest Bank Arizona, said that, after a difficult start, Caliber has greatly improved its franchise. "They have a real emphasis on small business lending and they have started to carve out a niche for themselves," he said.

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