Kansas is bracing for a tornado of bank takeovers.

Just hours after the Sunflower State opened its borders last Wednesday, St. Louis-based Mercantile Bancorp. snapped up two banking outfits controlling a total of $1.1 billion in assets.

But the storm had actually begun brewing in January, when Commerce Bancshares Inc., Kansas City, Mo., announced it would acquire the $29 million-asset Lenexa National Bank in the affluent suburbs of Kansas City, Kan. Commerce has since announced plans to acquire two additional banks with a total of $83 million in assets.

Not to be outdone, United Missouri Bancshares Inc., also of Kansas City, in recent months has announced plans to acquire six Kansas banks with assets totaling $576 million.

But many more institutions are up for grabs.

"There is no question that there will be a lot of consolidation," said Darrell Knudson, chairman and chief executive of Wichita-based Fourth Financial Corp., Kansas' biggest bank holding company, with $4.1 billion in assets.

Under rules adopted July 1, banks in Missouri, Oklahoma, Iowa, Arkansas, Nebraska, and Colorado may acquire Kansas banks. But Missouri's major banks, the biggest in the region, are expected to dominate acquisition activity.

St. Louis-based Boatmen's Bancshares, for example, is understood to be talking to Capitol Federal Savings and Loan, Topeka, Kansas' second-largest thrift, with $3.8 billion in assets. A Boatmen's official declined to comment.

Mark Twain Bancshares, St. Louis, also is on the prowl in Kansas. And from Nebraska, FirsTier Financial of Omaha is expected to enter its neighboring state's banking industry.

The rush to establish a foothold in Kansas is easy to understand. The state has a stable and well-diversified economy, with an unemployment rate about half the national average. Most of its financial institutions are healthy.

"What better climate to be in banking?" asked Harold Stones, executive vice president of the Kansas Bankers Association.

The list of potential acquisition candidates runs long, with more than 500 banks holding a total of about $30 billion in assets. However, many are tightly held by families and individuals and many not be receptive to an acquisitive hug from a bigger neighbor.

Forced to Look Elsewhere

Fourth Financial Corp., meanwhile, has been freed to move into neighboring states. And given that the Wichita-based company already holds about 12% of the state's deposits, the maximum allowed, it has almost no choice but to enter other states.

"We have plans to expand geographically," Mr. Knudson acknowledged in an interview.

But there's no guarantee Fourth Financial or other independence-minded Kansas banks will get their way. Although it is the state's largest, Fourth Financial is small in comparison to some of Missouri's biggest banks.

"They are not big enough that they could not be taken by somebody," said Jerry Swords, president of Swords Associates Inc., a bank consulting firm in Kansas City, Mo.

Demographic Magnet

The Kansas City metropolitan area is likely to see more action as Missouri-based banks extend their reach.

For example, Mercantile's acquisition of MidAmerican Corp. and Johnson County Bankshares Inc. last week will give the company access to Johnson County, one of the fastest-growing areas in the country.

"That is the cream of the crop there; that's what everybody is after," said Matthew Finn, a banking analyst at Burns, Pauli in St. Louis.

Kansas City-area banks that have been identified as takeover targets include: Valley View Bancshares, with about $58 million in assets, and One Security Inc., with $51 million.

In Wichita, First Bancorp of Kansas, with $1.22 billion in assets, and Union Bancshares, with $56 million in assets, are cited as potential targets.The Sunflower StateOpens Its BordersPossible acquisition Assets(*)targets (billions)First Bancorp of Kansas $1.22WichitaValley View Bancshares $0.58Inc., Overland ParkUnion Bancshares Inc. $0.56WichitaOne Security Inc. $0.51Kansas CityKansas State Financial $0.40Corp., Wichita Assets(**)Possible acquires (billions)Boatmen's Bancshares $17.3St. LouisMercantile Bancorp. $8.1St. LouisCommerce Bancshares $6.6Inc., Kansas CityUnited Missouri $4.6Bancshares, Kansas CityFirsTier Financial Corp. $2.9Omaha(*)Yearned 1991 (**)March 31Sources: Ferguson & Co., company reports,Keefe, Bruyette & Woods Inc.

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