This week's $5.9 billion merger deal between Zions Bancorp. and First Security Corp. could alter the landscape for community banking mergers out West, industry sources said.

The two Salt Lake City-based rivals have been among the most active buyers of small banks in the region, having acquired 24 banks between them since 1996, including six in California.

But with Zions' and First Security's attention likely to be focused on merger details through yearend, other buyers are in position to make small bank deals without looking over their shoulders.

"This is an opportunity for others to be aggressive acquirers," said James R. Bradshaw, an analyst at Pacific Crest Securities in Portland. "They won't have to worry about the 800-pound gorilla anymore."

Among the probable buyers in the West are Greater Bay Bancorp in Palo Alto, Calif., Community First Bankshares in Fargo. N.D., and Westamerica Bancorp. in San Rafael, Calif. Large players such as U.S. Bancorp in Minneapolis, Comerica Inc. in Detroit, and two Hawaii-based banks, BancWest Corp. and Pacific Century Financial, also may step up acquisition efforts, sources said.

Zions, with $17.1 billion of assets, was viewed as an especially formidable foe.

With its high stock price, Zions has been able to pay top dollar for other banks. Last month, for example, it announced plans to buy Pioneer Bancorp. of Reno for a whopping five times book value and 22 times its projected earnings.

Zions' stock has dipped this week, but it was trading at five times book and 31.7 times earnings before the First Security deal was announced. That is well above the average price-to-earnings multiple of 21.66 for the top 50 U.S. banks.

"We know when Zions can pay 30 times earnings and we can only pay 15 times earnings, that they will get the deal done," said Donald R. Mengedoth, chairman and chief executive officer at Community First, which has $5.9 billion of assets.

"With the prices Zions could pay, I'm glad they never showed much interest in Northern California," said David L. Kalkbrenner, president and chief executive officer at $1.8 billion-asset Greater Bay.

Zions' chief financial officer Dale Gibbons said the company is not expected to make any more deals until it closes the First Security purchase in the fourth quarter. The combined company, to be named First Security, will have $40 billion of assets.

"We're really putting the brakes on," Mr. Gibbons said.

With the West's most aggressive buyer on the sidelines, sale prices for community banks are likely to fall.

"It's a buyer's market, and banks will have to take a lower price or stay independent," said Nick Barbarine, senior vice president at Hovde Financial Inc., a Washington, D.C., investment banking firm. "We won't see deals at 20 times to 25 times earnings."

In addition, smaller banks may no longer be attractive to the larger First Security, if and when it starts to make acquisitions again.

"How much interest will Zions show in a $150 million-asset bank?" said Jim Baxter, a partner at Baxter, Fentriss & Co., a Richmond, Va.-based investment banking firm. "This takes them off the radar screen."

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