SAN FRANCISCO - Blocked from expanding in Washington State through acquisitions, U.S. Bancorp said on Tuesday it has launched a program to open new branches in the state.
The Portland, Ore.-based company said it plans to open nine de novo offices in metropolitan Tacoma by June 1993, bringing its total in the area to 12. In addition, it will open two offices in the Everett area north of Seattle before yearend.
Besides those 11 branches, U.S. Bancorp will probably open other de novo offices in the Tacoma and Everett areas and elsewhere in the state, said R.D. Keating, U.S. Bank of Washington senior vice president.
Many Roads to Tacoma
Adding de novo branches is generally more costly than acquiring existing offices. Mr. Keating said U.S. Bancorp going the de novo route because two acquisition attempts in Washington had failed.
"With a 1% market share [in the Tacoma area], we had to do something," he said.
To save money, not all branches will be full-size and full-service offices, Mr. Keating said. He predicted that the de novo branches as a group will reach the break-even point "in a couple of years."
Pruning the Evergreen
U.S. Bancorp's strategy is to build market share within its home territory in the Pacific Northwest. Growth in Washington - by far the region's most populous state - is vital to achieving that goal.
Currently, U.S. Bancorp's Washington unit has 142 branches and $5.6 billion in assets. It is the Evergreen State's second-largest commercial bank, but will slip to third when KeyCorp completes its acquisition of Tacoma-based Puget Sound Bancorp.
Earlier this year the Justice Department prevented U.S. Bancorp from buying branches divested as part of the BankAmerica Corp.-Security Pacific Corp. merger. And KeyCorp's purchase of Puget Sound, the dominant bank in Tacoma, eliminated a long-coveted target.
One way to grow in Washington would be to buy branches of Pacific First Bank, which is has been put up for sale by its parent, Royal Trustco Ltd., Toronto.
U.S. Bancorp's plan for de novo branches "suggests it is not interested in Pacific First," said Scott McAdams, analyst with Ragen MacKenzie Inc., Seattle.