CHICAGO - Wells Fargo & Co. could have a deal as early as this week to double its deposit share in Nebraska by buying First Commerce Bancshares of Lincoln.
After a surge in First Commerce's share price Thursday, the companies confirmed that negotiations were under way. Wells Fargo would not elaborate, but First Commerce said in a release that the deal is valued at about $36 a share. At around $480 million, that would be twice book value.
"We are in informal discussions at this point," said First Commerce Bancshares spokeswoman Kristi Schoemaker. "We expect everything to close" this week.
Buying $2.3 billion-asset First Commerce would lift Wells Fargo's share of deposits in the Cornhusker State to 13%. That would put $207 billion-asset Wells, which is based in San Francisco, in second place in Nebraska, ahead of U.S. Bancorp - which has an 8% market share - but behind First National of Nebraska, which has 18%.
Wells Fargo's stock slipped 25 cents Friday, to $38.75. First Commerce's shares fell by $2.5625, or 7.48%, to $31.6875, after gaining $4.25 Thursday. Before Thursday's leap, First Commerce shares were up 88% for the year.
Analysts said the potential deal is consistent with Wells' familiar expansion strategy.
"Wells Fargo typically buys a dozen or so small banks a year," said Ron Mandle, an analyst at Sanford C. Bernstein & Co. "They build market position by buying in markets where they are underrepresented."
The company usually seeks small but profitable banks that it can make even more profitable by consolidating their back-office operations with its own national operation and by expanding their product lines, Mr. Mandle said.
Wells spokesman Larry Haeg commented, "We've said for a long time that we are interested in expanding in a ring of states adjacent to our current banking franchise" and through "fill-in" acquisitions in established markets.
Mr. Haeg added that his company aims to be among the top two in any market it enters. Norwest Corp., which bought Wells in 1998, had a long-standing presence in Nebraska.
The addition of First Commerce would give Wells 23 new branches throughout the state and bring its Nebraska branch count to 53. First Commerce also owns a branch in Colorado Springs.
The family of First Commerce chairman and chief executive officer James Stuart Jr. owns about 57% of its shares, which traded thinly until rumors emerged in recent weeks that it would be bought.
First Commerce's primary businesses are National Bank of Commerce, First Commerce Mortgage, and its asset management company First Commerce Investors. It offers trust, commercial, consumer, correspondent, retail deposit, and mortgage banking services in Nebraska and adjacent states. It also sells computer services through its First Commerce Technologies Inc. subsidiary.
Wells Fargo has made several similar deals recently. It agreed in December to buy National Bancorp of Alaska for $907 million; this would give it $3.1 billion of assets, 54 branches, and a dominant position in Alaska. In November it agreed to buy $834 million-asset Michigan Financial Corp. for $209 million.
The First Commerce acquisition would be Wells' 15th deal since the Norwest merger and its second-biggest in that time.
