Just a few months before it merges with a Northern California rival, Vallicorp Holdings is casting off parts of its branch network.
And other banks are ready to snap up the branches, along with any customers that come with them.
Since early December, the Fresno-based holding company has applied to close 13 of its 58 branches in northern and central California. Approval has already been granted in 12 cases, and three have actually closed.
The $1.3 billion-asset company agreed in November to be acquired by San Rafael-based Westamerica Bancorp. Shareholder approvals are still pending, but the deal is slated to be completed April 18.
Meanwhile, Vallicorp's smaller competitors are hoping to get their hands on some of the branches before they're actually closed. Vallicorp and Westamerica have already received queries from a number of other local banks interested in buying branches. And community bankers say they're already picking up business from disgruntled Vallicorp customers.
"Westamerica, regardless of what they say, won't be construed as a local bank," said Dennis R. Woods, chairman and chief executive officer of $165 million-asset United Security Bank in Fresno. "When you talk about a $1.3 billion-asset and a $2.5 billion-asset coming together, for practical purposes that's not any different than Wells and First Interstate."
No deals have been announced yet, but sources indicated that three branches in the Sonora area might be sold to $55 million-asset Pacific State Bank in Stockton. The branches have $16 million in total deposits.
Vallicorp president and chief executive J. Mike McGowan cautioned, however, that there are "multiple interested parties" for the various branches.
Mr. McGowan said officials had decided to close five of the branches even before Vallicorp agreed to be acquired by $2.5 billion-asset Westamerica. He said those branches-in Fresno, Kern, and Sacramento counties-"just weren't meeting performance standards."
In the case of the other eight, Westamerica officials decided they either didn't meet that company's standards or didn't fit with their future plans. In other cases, they could easily be consolidated with existing Westamerica branches. The affected branches are in Fresno, Kern, Tuolumne, and Calaveras counties.
Officials of the two banks didn't discount the possibility of further branch closings after the merger is completed,
Mr. McGowan said he expects all 13 branches will be shuttered or sold before the merger closes, but "it'll be nip and tuck."
"We would be interested and we have let them know that. But so far all they've done is close branches," said Mr. Woods, whose bank is currently buying two branches from Wells Fargo & Co.
Westamerica officials say they hope to find jobs for the approximately 40 employees affected by the closings, but will offer severance packages to any who are laid off.
Many aren't waiting, however, particularly lenders. Mr. Woods said "there's a tremendous exodus" from the bank, noting that United Security has hired six former Vallicorp employees since December. Two others in the area went to Bank of the West and Clovis Community Bank.
Meanwhile, only one of Vallicorp's seven-member executive team will be continuing with Westamerica. John Tait, executive vice president of community banking, will likely join the larger company as regional head of what are now Vallicorp's operations, Mr. McGowan said.
As for the others, "there was never any discussion or expectations that there would be positions offered or accepted," Mr. McGowan said. "It would not have made sense in this deal."