Strong Banks Are Emerging In Rockies

After rough times in the 1980s, the Rocky Mountain region is seeing the reappearance of favorable economic trends. Banks such as Utah's First Security Corp. and Idaho's West One Bancorp, beckon investors with good earnings expectations and, in some cases, the prospect of future acquisition.

First Security and West One "offer the most upside potential, due to a combination of attractive fundamentals and takeover characteristics," said Norman Jaffe, a banking industry analyst at Fox-Pitt Kelton Inc., New York.

A Few Choice Targets

In addition, the region offers some appealing takeover candidates. Mr. Jaffe noted that the Rocky Mountain area consists of "highly concentrated state marketplaces," which means the opportunities of potential acquirers to buy meaningful market positions are limited to these few banks.

Reflecting the consolidation trend in the industry and the improved economic scenario, the independent banks of the mountain region are mostly selling at premiums to book value.

Zions Bancorp., Salt Lake City, recently sold at 146%; West One at 135%; Affiliate Bankshares, Denver, at 116%; Valley National Corp., Phoenix, at 113%; Colorado National Bankshares, Denver at 102%; and First Security at 102%.

The lone exception was Sun-West Financial Services Inc., Albuquerque, which has had some problem loans. Its shares currently trade at about 70% of book value.

Mr. Jaffe thinks "the wave of consolidation will fast be approaching this region as large West Coast and Midwest banks seek geographic diversification and national banking status."

Merger News Buoys Stocks

Some recent moves by big banks have fueled speculation and boosted stock prices of the banks in the region.

BankAmerica Corp. recently announced it was acquiring Security Pacific Corp., Los Angeles, giving it the No. 1 market share in Arizona, and buying Valley Capital Corp., Las Vegas, the second-largest banking company in Nevada.

Norwest Corp., Minneapolis, in April completed the acquisition of United Banks of Colorado Inc., Denver, making it No. 1 in that state. And Norwest is said to have talked with Valley National, which will drop from first to second in Arizona market share after the BankAmerica deal.

Mr. Jaffe says other potential acquirers are KeyCorp, Albany, N.Y., which has a small banking base in the region; U.S. Bancorp, Portland, Ore.; First Bank System Inc., Minneapolis; and Boatmen's Bancshares Inc., St. Louis.

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