Shares of SierraWest Bancorp of Truckee, Calif., jumped more than $3 on Thursday, to $24.125, on rumors that the company would be bought by a Northern California competitor.
Industry watchers speculated that Westamerica Bancorp., a $3.9 billion- asset company in San Rafael, Calif., is seeking to buy SierraWest, which has been under pressure from boutique fund managers to sell.
"I wouldn't be surprised if Westamerica bought them," said Erick J. Reim, an analyst at Piper Jaffray in Minneapolis.
Based near Lake Tahoe, SierraWest operates 20 branches along Northern California's Interstate 80 corridor and is among the nation's top 25 Small Business Administration lenders.
Shares of the $846.6 million-asset bank were traded heavily Thursday and at midday Friday were unchanged. Shares of Westamerica were down 13 cents Thursday, to $30.125, and by midday Friday had risen 44 cents, to $30.5625.
SierraWest chief executive officer William T. Fike could not be reached to comment Friday. But investors have said they are disappointed with SierraWest's earnings growth, return on equity, and ability to control overhead expenses.
The company, which went through a wrenching restructuring last year, is expected to report third-quarter results Tuesday. It reported a second- quarter loss of $72,000, or 2 cents a share.
Westamerica, an acquisitive company since 1992, has tried to buy four other community banks this year, but the surging stock market scuttled the deals.
Chairman David L. Payne could not be reached to comment Friday, but a Westamerica spokesman said it is company policy not to comment on potential acquisitions.
In an interview last month, Mr. Payne said he has been "distressed" over not making deals. Westamerica bought back stock in July to leverage its excess capital, but Mr. Payne vowed to grow through mergers.
Industry analysts said the recent slide in bank stock prices could offer a good opportunity to Westamerica, which has a reputation for achieving rapid cost savings in acquisitions. Analysts said they expect SierraWest to fetch $30 to $35 a share.