Think of it as the Noah's Ark of consolidation: Bank deals are now coming in twos.
Some banks, eager to bulk up quickly, are buying two banks at once-and experts say the strategy may well spread.
On Tuesday, Birmingham, Ala.-based Regions Financial Corp. moved to buy a bank and a thrift in South Carolina in one fell swoop. The next day, Zions Bancorp, Salt Lake City, scooped up a pair of banks in Colorado. (See story, page 6.)
"Banks are not just doing one acquisition and waiting for things to be consummated before they go to the next one," said Scott Edgar, director of research at Sife Trust Fund in Walnut Creek, Calif.
"It's the urge to merge," he added. "Banks are finally realizing that it is time to sell and you should buy now before the premiums get even higher."
Indeed, the two-at-a-time strategy underscores just how hot the acquisition game has become.
At a New York forum on mergers and acquisitions, sponsored by American Banker and the Strategic Research Institute, investor James K. Schmidt said Wednesday that he sees no end to the deal fever.
"I think the merger activity is going to continue at its pace for many years regardless of the expense structure," said Mr. Schmidt, who heads up John Hancock Advisers, the largest bank mutual fund in the country.
Wachovia Corp. kicked off the back-to-back action this summer. After sitting out the merger trend for more than five years, Wachovia unveiled two major acquisitions in Virginia within two weeks, for a total tab of nearly $3 billion.
This week's round of deals have taken the strategy up a notch, but analysts see little risk.
"There is nothing wrong with this strategy when the aggregate of the bank being acquired is much smaller than the acquirer," said John Mason of Interstate/Johnson Lane Inc.
He added that he expects the approach to catch on with other bankers as the pressure to consolidate grows more intense.
"Banks may collect a bunch of smaller banks to round out a position or build up their market share," he said. "And they are going to have to do it quickly because there ain't much left in some of these states."
Although mergers are coming at an increasingly rapid clip, Mr. Schmidt, the investor, said the deals are generally sensible and fairly priced.
Increasingly, he said, mergers are taking place for solid strategic reasons-"economies of scale, economy of extensions, cross-selling opportunities, and a chance to achieve efficiencies." That contrasts with many of the deals in the 1980s, he said.
"Mergers today have much more durability and can stand up better to criticism," Mr. Schmidt said.
While some observers fret about increasingly high prices on mergers, Mr. Schmidt said he was not worried.
"There is a lot of talk about the acceleration of the merger prices and a lot of commentators say that the prices are too high," he said. However, he said, the prices are not as high as in past years when compared to the earnings of both the acquirers and the targets.
"The prices are actually better," he argued. "The prices are much higher, so they sound much worse. However, banks today can get deals done easier without that much dilution."
Mr. Schmidt's comments at the forum came one day after a Goldman, Sachs & Co. official predicted a final burst of major mergers over the next two to four years. Christopher Flowers, the head of Goldman Sachs' bank mergers practice, said activity would then become a series of small deals to solidify banks positions in regional markets.
Some other analysts offer a similar view.
"We think consolidation is heating for banks of all sizes," Michael Mayo, an analyst at Credit Suisse First Boston, said in an interview. "And we continue to believe that once in a lifetime consolidation is expected to happen over the next few years."
If this week is any indication, many of those deals will come in twos.