PORTLAND, ORE. -- Roger L. Breezley sounds like a man who's prepared to deal.

For years U.S. Bancorp's chairman and chief executive proclaimed the same strategy: to go it alone and build on his company's position as the premier banking institution in the Pacific Northwest. But now he says he is open to a merger.

"I will explore anything with anybody at any time," Mr. Breezley declares.

Make no mistake, Mr. Breezley, 54, would prefer to keep U.S. Bancorp independent. He is not actively shopping his company and stresses that his bank remains committed to its Northwest strategy. But in this era of bank consolidation, he says he must keep an open mind about joining forces with another company.

"A CEO [who] doesn't always explore and listen and think and allow ideas to be put on the table" is not doing a service to his shareholders, he says.

Mr. Breezley's comments are not just rhetoric. Last year, for example, he initiated merger talks with Victor J. Riley Jr., chief of Albany, N.Y.-based KeyCorp. Those conversations did not go beyond the preliminary stage, but Mr. Breezley hints that he is willing to consider other partners.

"I've had breakfast with [Banc One Corp. chairman and chief executive] John McCoy," he says.

"I've been friends with [Norwest Corp. chairman and chief executive] Lloyd Johnson. I've visited with [Wells Fargo & Co. chairman and chief executive] Carl Reichardt. I know [First Interstate Bancorp chairman and chief executive Edward] Carson."

A merger with KeyCorp would have fused two companies of about the same size: U.S. Bancorp has $19.3 billion and KeyCorp $23 billion in assets. Mr. Breezley's management team almost assuredly would have played a dominant role in the combined company. Mr. Riley is expected to retire in a few years, and he has not designated an heir apparent.

Mr. Breezley argues that a Key-U.S. Bancorp combination would be a special case, in effect an in-market merger, because both companies have overlapping operations in Oregon and Washington.

Valuable Franchise

U.S. Bancorp's chief says he can't predict whether independence or a merger is ultimately in store for the company. But, he adds, "if we have to become part of something else, we're coming in with one hell of a valuable piece of the equation."

Whatever Mr. Breezley's attitude, few companies could afford to buy U.S. Bancorp. San Francisco-based analyst Donald K. Crowley, a consultant with Keefe, Bruyette & Woods Inc., figures it would take a premium of at least 2.25 times book value, or $3.3 billion, to do a deal.

"There aren't many companies that could absorb them without significant dilution," Mr. Crowley says.

All the same, U.S. Bancorp's solid but unspectacular track record keeps its stock price just low enough to leave it vulnerable.

The company trades at a respectable multiple: around 1.6 times book value. But that's lower than all but two or three of a group of superregional peers. Among those with significantly higher multiples are Banc One and Norwest, most frequently cited as possible U.S. Bancorp buyers.

There is nothing fancy or slick about the man who heads U.S. Bancorp. Mr. Breezley has little of the charisma of John A. Elorriaga, who preceded him as chief executive.

He speaks with the flat cadences of the Great Plains and peppers his sentences with words like "darn" and "heck," marks of his roots as a farm boy from Bonetrail, N.D.

Car Enthusiast

A former accountant and mobile-home company executive, Mr. Breezley used to spend his off hours racing stock cars. He still follows the sport avidly and fills his office shelves with model cars.

Mr. Breezley is no great speaker, and his stumbling speeches to investors, full of self-deprecating references, often fail to convey his vigor or his vision.

What's more, his candid comments, especially about federal regulators, have occasionally gotten him in troble. The Office of the Comptroller of the Currency is known to have warned U.S. Bancorp to tone down its public criticism of loan classifications following harsh remarks by Mr. Breezley and other senior company executives last year. Mr. Breezley has since become more guarded in his public remarks and less than frank in interviews.

Shrewd Strategist

Despite the rough edges, Mr. Breezley is one of the industry's more creative and intelligent managers, and he has a sharp sense of strategy. "Roger has got a very fertile mind," said J. Richard Fredericks, an analyst with Montgomery Securities, San Francisco.

In the five years since Mr. Breezley took command, U.S. Bancorp has boosted its earnings and return on assets each year. In the first six months of this year, the company netted $100.4 million, representing an ROA of 1.08%. However, with the company rapidly amassing capital, return on equity has fallen below 14%.

Some analysts believe U.S. Bancorp should be doing better given its dominance in Oregon and strong third position in Washington. Nagging, though not severe, loan quality problems and inconsistent cost control have kept U.S. Bancorp from joining the ranks of banking's high-performing elite.

"Their performance is good but not great," says Lawrence R. Vitale, an analyst with kemper Securities, Chicago "One thing they need to do to assure their independence is improve their performance."

Ratios 'Unsatisfactory'

Mr. Breezley agrees that U.S. Bancorp can improve: "Our return on assets, our return on equity, our overhead ratios, and our nonperforming ratios - every one of them is unsatisfactory."

His target, he says, is a return on assets over 1.2% and a return on equity over 17% within two years.

Meanwhile, Mr. Breezley faces a difficult strategic landscape.

He is locked into a region with a population smaller than metropolitan Los Angeles, presenting him with limited growth possibilities. He faces stiffer than ever competition from KeyCorp, juggernaut Bank-America Corp. and revitalized First Interstate.

At the same time, U.S. Ban-corp's core strategy of expanding in the Northwest suffered two painful blows earlier this year when the company was blocked from acquisitions in Washington State, the region's biggest market.How Investors ViewU.S. BancorpStock price as a percentageof book value(*)Banc One 221.9%Norwest 203.8%Wachovia 200.8%SunTrust 200.0%CoreStates 174.1%KeyCorp 172.4%PNC Financial 164.4%First BankSystem 163.8%First Union 160.6%NBD Bancorp 157.4%U.S. Bancorp 157.3%Fleet 154.5%Boatmen'sBancshares 143.5%(*) At 8/7/92Source: American Banker

Branches Denied

First, Mr. Breezley saw Tacoma-based Puget Sound Bancorp, the only big independent bank left in Washington, snapped up by KeyCorp. Then, on antitrust grounds, the U.S. Justice Department prohibited U.S. Bancorp from buying 86 branches divested as part of the Bank-America-Security Pacific merger.

Mr. Breezley says he was disappointed by the Justice Department's decision. And losing Puget Sound to KeyCorp still incenses him.

"We've had good conversations with [Puget Sound chairman and chief executive W.W.] Philip over a number of years. We honestly felt that when they wanted to do something, we would be one of the primary people he would be talking with."

"We did not get a call. I initiated a call because I heard about the Key situation. The tenor was not necessarily a pleasant one. Obviously they weren't pleased that we were butting our heads in."

Deadline Pressure

Asked about the conversation, Mr. Philip said Puget Sound was under pressure to complete the KeyCorp deal before the New York company's offer expired.

Stymied in Washington, Mr. Breezley has expanded elsewhere. In the process, he has stretched the definition of the Northwest.

Earlier this year, he agreed to buy 20 Northern California branches and 29 Nevada branches from BankAmerica for some $70 million. The deal boosted U.S. Bancorp's Northern California stake to about $2 billion in assets, while giving the company the third-largest banking franchise in Nevada.

Meanwhile, after several failed Idaho acquisition attempts, U.S. Bancorp entered the state by moving the headquarters of a Spokane, Wash., subsidiary across the state line. The maneuver prompted protests from Idaho banking officials.

Acquisition Scorecard

All told, Mr. Breezley has made six bank or branch-and-deposit acquisitions in the past two years, including the purchase of a $924 million-asset thrift, HeartFed Financial Corp., in Northern California. But that's not enough to satisfy some analysts who think the company may be falling behind in the interstate expansion race.

"If they are ultimately going to be in control of their own destiny, they are going to have to have acquisition-led growth," warns R. Jay Tejera, an analyst with Dain Bosworth Inc. In Seattle.

Mr Breezley rejects the argument that U.S. Bancorp needs to be a bolder acquirer. Earnings growth will come from other sources, he promises.

The company has actively built its national fee-producing businesses, including mortgages and affinity-group credit cards. It has made a foray into the credit reporting business by buying Credco Inc., a company that merges credit information from other credit reporters.

And Mr. Breezley vows to win market share from competitors. That's his strategy for expansion in Washington following the failure to win Puget Sound or BankAmerica's divested branches.

With most other big banks in Washington going through mergers and dealing with consolidation problems, "we're the only bank in place," he says.

BankAmerica Poses Threat

Despite Mr. Breezley's bravado, some U.S. Bancorp officials express deep concern about the company's competitive position. They worry especially about BankAmerica's mass marketing prowess.

"We just can't go head to head," says Kevin R. Kelly, chief of the company's flagship Oregon unit.

U.S. Bancorp's response is to try to make itself more nimble than its giant rivals. The company has moved pricing, staffing, and marketing authority to area managers. Meanwhile, it is upgrading data operations such as customer information systems.

Mr. Breezley plays down the internal changes, rejecting the word reorganization in favor of the milder-sounding "fine-tuning."

But with competitors holding advantages of scale, advertising might, and technology, U.S. Bancorp's continued independence depends on taking chances and making the right moves to remain successful.

Mr. Kelly pulls no punches: "We could have gone on," he said. "But we would become mediocre and would be taken over."

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