Announcing its first home-state deal in three years, Wells Fargo & Co. said Thursday that it would buy North County Bancorp in Escondido, Calif., for $112 million in stock.
San Francisco-based Wells Fargo said it would pay $21 a share -- or 3.2 times book value -- for North County, which has $349 million of assets and nine branches in San Diego and Riverside counties. Wells, with $205 billion of assets, said it was attracted to North County because of its location in booming Southern California and its strong position in that market.
"North County is a well-run, solid community bank that has built a wonderful base of small-business customers," said Colleen Anderson, Wells Fargo's regional president for Southern California. "We will bring an added dimension of services to their customer base."
Observers said they were not surprised by North County's decision to sell. Shares of the bank have skyrocketed by 45% since May.
"Word has been out for a long time that they wanted to sell," said Hans Schroeder, a bank analyst at Hoefer & Arnett in San Francisco. "And they got good currency with this deal."
James Gregg, chairman and chief executive officer of North County, said the decision was influenced by the upcoming elimination of pooling-of-interests accounting and the age of the bank's senior management and board. North County was established in 1979, and Mr. Gregg, 68, said he expects to retire from banking within a year.
"With our performance and the strength of the local economy, we thought this was the best chance to fetch a good price for the bank," said Mr. Gregg. "And the price was right."
The announcement had little impact on North County's stock price. In late trading Thursday, its shares were trading at $19.5937, nearly unchanged from Wednesday's close. Wells Fargo shares were up 3.7%, to $40.
Since its blockbuster merger last year with Norwest Corp., Wells has adopted the Norwest strategy of snapping up small banks in markets where it seeks to expand. In the last two months, the company has announced deals to buy $1.2 billion-asset Prime Bancshares in Houston, and First Place Financial Corp., a $932 million-asset company in Farmington, N.M.