Norwest Corp. of Minneapolis won one of Texas banking's hot properties last week, signing a definitive agreement to acquire State National Bank of El Paso.
The price, to be paid in cash, was not disclosed, but analysts said it was likely between $150 million and $160 million - twice the $79 million equity value and more than 13 times 1994 earnings of $11.3 million.
The El Paso bank, which is owned by Mexican investors, will increase Norwest's Texas assets by 50%, to $3.3 billion, and give it eight offices in the largest of Texas' border cities.
Robert Whetten, State National's president and chief executive officer, confirmed that five banks had participated in a "limited bidding" contest, including "major players" in Texas, New Mexico, and Arizona.
The major banks in those states include NationsBank Corp., Banc One Corp., BankAmerica Corp., and First Interstate Bancorp.
The deal will make Norwest one of the two largest banks in the area. Texas Commerce Bank of Houston has a nearly equal level of deposits.
The acquisition meets Norwest's desire to be either the largest or second-largest bank in a chosen markets.
"We want to have a bank with a significant franchise instead of one with just a niche, and the dominant franchises in this state are already spoken for," said Ken Murray, an executive vice president with Norwest and head of its Western community banking group.
"Just trying to pick up institutions here and there in Dallas and Houston is not what we're good at. And there are still plenty of community banks in Texas," Mr. Murray said.
Indeed, the company has stayed away from the Dallas and Houston markets. Nonetheless, the bank has been an aggressive buyer in Texas, having picked up 10 institutions in the last 18 months.
The largest of the acquisitions was First United Bank Group Inc., which is based in New Mexico but does most of its banking business in the Texas panhandle city of Lubbock. Today, the Lubbock bank is the 14th-largest in the state, with $1.2 billion of assets.
State National's proximity to New Mexico creates a link between Norwest's Texas and New Mexico operations. Norwest already has a presence in Las Cruces, N.M., 40 miles north of El Paso.
Of $61.8 billion of total Norwest assets, $4.3 billion is in Texas and New Mexico, not including State National.
Mr. Murray said State National's focus on cross-border financing and agriculture mirrors Norwest's lending focus. Likewise, the El Paso bank's lending ties to the so-called maquila businesses along the border will fit well with Norwest's small-business objectives.
For State National, the deal ends two months of speculation about its buyer. The bank, which used to be owned by MCorp of Dallas, reportedly received a $150 million offer in March from NationsBank Corp.
State National shareholders chose Norwest after determining that its philosophy of community banking matched their own, said Mr. Whetten.
"For us it was a question of 'Who do we want to hook our wagon to?'" said Mr. Whetten, a former Citicorp banker. "We felt much more comfortable with Norwest than we did with any of the others."
The estimated price is higher than the average of acquisitions for banks in Texas, said Ed Dillon, an analyst with SNL Securities in Charlottesville, Va. But he cautioned that the deal is untypically large compared to most recent Texas bank acquisitions.