Banks and thrifts at Piper Jaffray's annual investor conference were cruising for smaller companies to acquire-and finding slim pickings.
"The possibilities have really thinned out," said one Firstar Corp. executive. "The days of us doing $100 million community bank acquisitions are over, and there isn't much left in the $1 billion to $10 billion category."
The Milwaukee banking company is thinking about buying some small regional investment banking firm, he said, adding, "It's the trendy thing to do."
The conference presented an opportunity to meet with the top management of a number of smaller companies and to hear their presentations to investors.
Included on the program were community banks, thrifts, and finance companies including First Federal Capital Corp., Financial Federal Corp., and Arcadia Financial Ltd.
A representative of Washington Mutual Inc. was among the would-be buyers. The Seattle thrift already has agreed to buy Great Western Financial Corp. for $7 billion, but the possibility of another acquisition in the near future shouldn't be ruled out, chief financial officer William Longbrake told investors.
"California is ripe for continued consolidation," he said. The thrift has resources set aside to purchase commercial banks while the merger with Great Western is being completed, he said.
There is no stockpile of cash slated for finance company acquisitions, he said, but Washington Mutual is keeping its eyes open.
"We're looking toward high-yield product," Mr. Longbrake said. "We're definitely not putting all our eggs into traditional mortgage product."
Washington Mutual's goal this year is to be the premier financial association "in the western United States," he added. But by next year, he said, that will change to "in the United States."
KeyCorp is also actively pursuing higher-margin business, said Henry L. Meyer, chief operating officer. But the recent purchases of Champion Mortgage, Parsippany, N.J., and Leasetec Corp., Boulder, Colo., will keep the bank busy for a while, he added.
Analysts have said that KeyCorp paid a "very full" price for Champion, the subprime mortgage lender, but Mr. Meyer dismissed such talk.
"Beauty is in the eye of the beholder," he said. "It's in a business that we want to grow, in an industry that's growing."
Champion's loans are not high-risk, unlike those of other companies whose books KeyCorp reviewed, he said. He said the bank did not bid on the other companies.