Continuing a string of small-bank deals, Wells Fargo & Co. on Friday announced plans to purchase Napa National Bancorp for $33 million in stock.
The purchase, which is expected to be completed in the first quarter of 2000, would give Wells Fargo four branches, $160 million of assets, and 80 employees in the heart of wine country.
"This is a jewel of the community banks in this region," said Anat Bird, president of Wells Fargo's Northern California region. "We really appreciate the chance to get back into the heart of the wine district."
Analysts said the price tag, the equivalent of roughly 3.3 times Napa National's book value and about 21 times trailing earnings, falls in the middle range of similar-size deals in California.
Wells Fargo has been on a nationwide community bank acquisition tear since its November 1998 merger with Norwest Corp. Since then $207 billion-asset Wells has closed seven acquisitions of banks with an average asset size of $250 million. Purchases of five banks with an average assets of $737 million on average are pending and it has also made deals to purchase several specialty finance firms, as well as the regional brokerage Ragen MacKenzie Inc.
James R. Bradshaw, an analyst at Pacific Crest Securities in Portland, Ore., said Wells has focused on filling in gaps in its 21-state branch system.
"They are looking all over their market from 30,000 feet and saying, 'We're not 1, 2, or 3 here, here, and there, so let's fill these holes in now,' " he said. "Wells' regional presidents are literally talking to dozens of community bankers around the West."
Wells has a strong presence in Napa, but it shuttered its main branch there in the mid-1990s as part of an overhaul of its distribution strategy that involved closing hundreds of branches in favor of supermarket locations.
The merger with Norwest - as well as the expanding high-net-worth and wine industry client base - has apparently changed the company's approach to building its presence in the market.
"What's not to like?" Ms. Bird said. "It's a thriving marketplace with a diverse industrial base, tourism, and a great customer segment."
Napa National popped up on Wells Fargo's acquisition radar after Napa chairman W. Clarke Swanson experienced health problems and was advised by his doctor to divest some holdings, Ms. Bird said.
Mr. Swanson, a food industry executive who also owns Swanson Vineyards in Oakville, Calif., decided to sell the bank, and was "aware of the Norwest reputation" for placing a high value on employees, she added.
Napa National has focused on lending to smaller vineyards. Its proposed marriage with Wells Fargo would allow it to offer products and services to the bigger players in the booming wine business, Ms. Bird said. Brian J. Kelly, Napa National's chief executive, would stay on after the acquisition to spearhead lending to smaller vineyards, Ms. Bird said. It has not been determined what title he would have, she added.
Analysts said that because of the proximity of some Wells Fargo and Napa National branches, one or two locations might be closed.