Norwest Corp. of Minneapolis has moved to get stronger in several of its market areas through an agreement to buy six banks in a single transaction.
Terms of the stock purchase deal, which would be accounted for as a pooling of interest, were not disclosed. Analysts estimated the group of banks, with assets of $1.4 billion, are selling for $300 million to $350 million.
The deal is expected to close in the second quarter, and Norwest said it would not have a material effect on earnings.
The banks, in effect a chain partly owned by Minnesota businessman John Barry, would give Norwest a bigger presence in its home market of Minneapolis-St. Paul, as well as Albuquerque and Phoenix.
Norwest would add 68 branches and $1.2 billion of deposits in Arizona, Colorado, Minnesota, New Mexico, and Wisconsin. An undetermined number of branches would close in Minneapolis as a result.
The banks and their respective assets are: Bank of New Mexico Holding Co., Albuquerque, $390 million; MidAmerica Bancshares, Newport, Minn., $320 million; Wisconsin Bancshares, Newport, Minn., $230 million; Charter Bancorp., Phoenix, $220 million; Minnesota Bancshares, Mankato, $130 million; and Mountain Bancshares, Eagle, Colo., $80 million.
Norwest, with $88.5 billion of assets, may be the only company its size that seeks out small acquisitions. It has avoided blockbuster deals, preferring to target companies with $1 billion or less in assets.
"Norwest is the only big bank around that is still interested in doing a $100 million deal," said Ben Crabtree, an analyst with Dain Rauscher in Minneapolis. "But they do a number of small- and midsize acquisitions and by the end of the year they've added $3, $4, or $5 billion in assets."
This is not to say Norwest will not consider bigger deals. The company reportedly bid on First of America Bank Corp. of Michigan, which agreed to sell to National City Corp. of Cleveland in December.
Norwest chairman Richard M. Kovacevich has been adamant about not overpaying for acquisitions, and the company has been outbid as a result.
Mr. Crabtree said the deal for Mr. Barry's banks makes a lot of sense for Norwest. The locations are "a wonderful fit" with Norwest's geographic mix of Midwest and Southwest banking locations, the analyst said.
He also said there are significant branch overlaps in Minneapolis, which could provide cost-cutting opportunities.