In a deal that would provide entree to Southern California and ramp up its small-business lending effort, U.S. Bancorp said it has agreed to buy Bank of Commerce for about $314 million in stock.

The pact, announced late Thursday, would bring U.S. Bancorp one of the nation's top Small Business Administration lenders. It would also give the Minneapolis-based banking company 10 full-service bank branches in the burgeoning Southern California market.

"Bank of Commerce saw an opportunity over 20 years ago to respond to the needs of small business," said John F. Grundhofer, U.S. Bancorp's chairman and chief executive officer. "They more than responded, they excelled."

San Diego-based Bank of Commerce will "expand our relationships" in that market, he added.

Analysts said the deal, which is set to close in the second quarter, marks a significant change in U.S. Bancorp's acquisition tactics.

In the past, the $76 billion-asset company has considered beefing up its West Coast operations with a splashy acquisition, analysts said. Rumors have swirled about talks with Wells Fargo & Co., Union Bank of California, and Washington Mutual Inc.

But with major targets unavailable or unattractive, the banking company will have to satisfy its West Coast aspirations with numerous smaller deals, said R. Jay Tejera, an analyst with Dain Rauscher Wessels in Minneapolis.

"U.S. Bancorp had been the elephant hunter looking to add a major franchise in California, but this deal makes it look like they're now pursuing an aggregation strategy," Mr. Tejera said. "You can expect them to do a number of smaller transactions to build out the franchise."

U.S. Bancorp already operates 89 bank branches and 110 automated teller machines in California, concentrated in the San Francisco Bay area and regions north. Bank of Commerce's branches are in San Diego and Orange counties.

"This deal really stakes out some territory in Southern California," said Joseph K. Morford, an analyst with First Security Van Kasper in San Francisco.

U.S. Bancorp executives interviewed Friday emphasized the transaction would bolster the company's small-business lending prowess. U.S. Bancorp made roughly $18 million in SBA loans last year, while $638 million-asset Bank of Commerce originated $242 million. Once the deal is completed, U.S. Bancorp would service a $1 billion SBA loan portfolio.

"This gets us into the big leagues of SBA lending," said Chris Rasmussen, the U.S. Bancorp executive vice president in charge of western business banking. Bank of Commerce, which operates 23 loan production offices in 12 states, primarily offers SBA-backed real estate loans to small businesses that want to acquire or build their own facilities, said David H. Bartram, senior executive vice president.

U.S. Bancorp hopes to offer Bank of Commerce's small-business customers a host of products and services, such as cash management, 401(k) programs, and deposit taking.

"We want to explore opportunities to bring in a very broad and excellent product line," Mr. Rasmussen said.

Under the terms of the deal, Bank of Commerce shareholders would receive 0.6 shares of U.S. Bancorp for each of their own shares. The final price will be based on the average U.S. Bancorp stock price over the 20 trading days before closing.

The acquired branches are to take the U.S. Bank name in the fourth quarter. Bank of Commerce chief executive Peter Q. Davis is to remain with the bank through November 2000 to aid the transition. Mr. Davis, who was unavailable Friday, has said he is considering running for San Diego mayor next year.

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