Norwest Corp. seems to be on track for another busy year of bank acquisitions, especially in Texas.
In less than a week the $83.6 billion-asset company announced three bank deals that would add to its already dominant market share in Minnesota and its rapidly growing Texas market.
The acquisitions would bring $700 million of assets to Norwest, which has become one of the most acquisitive big banks through its strategy of buying small, often privately held banks in states where it is already doing business.
The Texas deals, which were announced Wednesday, were for $125 million- asset Myers Bancshares of Boyd and $70 million-asset Woodhaven National Bank in Fort Worth. Norwest also announced on April 17 it was buying $507 million-asset International Bancorp. in Golden Valley, Minn. The prices of the three privately held companies were not disclosed.
In Texas, Norwest is apparently willing to spend more than most banks for acquisitions. It paid 21.5 times earnings and about three times book value for Central Bancorp., a $1.1 billion-asset Fort Worth bank it acquired in January. That's a little pricier than its past deals.
The Minneapolis-based company's ability to pay such a premium for a Texas bank has miffed community bankers in the state who have acquisition plans of their own, said William Strunk, a Houston bank consultant. "They raised the price of poker," Mr. Strunk said.
So far, Norwest has shied away from the two largest cities in Texas, Dallas and Houston, and has concentrated on smaller cities and rural areas. Fort Worth is the exception so far, and the two deals announced this month indicate an appetite to build in that market.
Ben Crabtree, an analyst with Dain Bosworth Inc., said he believes paying high prices in Texas is going to present a challenge for Norwest's own target for return on acquisitions. It is adamant about earning at least a 15% return on investment for each. Nonetheless, "they tend to be pretty disciplined," said John J. Harris, an investment banker with ABN Amro Chicago Corp. "Not every small bank is going to get them interested."
Mr. Crabtree agreed, saying Norwest would like to expand in Wisconsin, for instance, but hasn't been able to find an attractive deal.
The recently announced Minnesota deal was an opportunity to grow in a state where there is little left to acquire.
In Texas, it continues to roam. It is also interested in $500 million- asset First Valley Bank of Raymondville, Tex., said one observer. u