Continuing its hunt for a presence in the Southwest, Norwest Corp. said Tuesday it had agreed to acquire Primerit Bank, a thrift owned by Southwest Gas Corp. of Las Vegas, in a cash deal valued at $175 million.
The transaction will make Norwest the third-largest banking company in Nevada. It will pay just under book value for the $1.8 billion-asset thrift.
Completion of the deal - expected in the third quarter - and another, for $1.6 billion-asset Amfed Financial Inc. of Reno, would give Norwest 20% of Nevada's total deposits, said Les Biller, executive vice president of south central community banking at the $71 billion-asset Minneapolis company.
Nevada is a growing market, fueled by a healthy gaming and tourism industry and increasing number of retirees moving to the state, Mr. Biller said. In addition to being attracted by the job and population growth, Norwest has been interested in expanding westward, having already entered Arizona, New Mexico, and Texas.
With the closing of the two acquisitions Norwest would have $2.6 billion of Nevada deposits, trailing only BankAmerica Corp. and First Interstate Bancorp, each of which has $3.5 billion in the state. Norwest would also be No. 3 in deposits in the Las Vegas and Reno markets.
Mr. Biller said Primerit and Amfed are primarily consumer banks that do very little business lending, but Norwest believes it can carve a niche lending to small and midsize businesses. Primerit is selling for slightly below book value, but the price reflects its underperformance, said Mr. Biller.
"Because we're going to put a lot of sweat equity into it, the price was relatively low," Mr. Biller said.
Norwest rarely pays high prices for acquisitions, a strategy that keeps it out of many major metropolitan markets, but attracts it to small growing towns in the Midwest and Southwest. The entrance into a sparsely populated state like Nevada follows that philosophy, said Thomas Maier of Everen Securities in Chicago.
"These guys are smart," said Mr. Maier. "They buy things relatively cheap and put them to work."
Southwest Gas Corp., a natural gas utility company, purchased Primerit in 1986 to diversify its business.