Zions, Regions Announce Multibank Deals

Article excerpt

Two acquisitive regional banks announced multibank deals this week in an effort to strengthen market share in competitive states.

Continuing its aggressive pace of mergers, Zions Bancorp. of Salt Lake City said Wednesday it would acquire two Denver-based banking companies for a combined $200 million.

The announcement came one day after Birmingham, Ala.-based Regions Financial Corp. agreed to pay a total of $224.5 million to buy a bank and a thrift in South Carolina.

The multiple acquisitions shows how dramatically the pace of deal-making is picking up. Larger transactions across the country, announced by some of the biggest regional banks, are lighting a competitive fire under the mid-tier banks, analysts said.

Zions agreed to buy $660 million-asset Vectra Banking Corp. and $130 million-asset Tri-State Finance Corp. for 3.8 times combined book value, or 18.5 times estimated 1998 earnings. Both purchases are expected to close in the first quarter.

Zions officials indicated Vectra was the more expensive of the two, and analysts said the company likely sold for something more than 4 times book value. But, they said, the prices were difficult to gauge because Tri-State is privately held. Zions said the two mergers were not contingent on each other.

The acquisitions will mean a larger presence across Colorado for $8.5 billion-asset Zions, particularly in Denver and Boulder. The addition of the companies would move it from No. 17 in Colorado market share, with $370 million of deposits, to No. 6, with more than $1 billion of deposits.

Zions president and chief executive officer Harris H. Simmons said the deals would give the Utah company a foundation on which to build. Zions operates three banks in Colorado: Valley National Bank of Cortez, Centennial Savings Bank, and Pitkin County Bank and Trust.

Mr. Simmons said his company plans to merge those banks with Vectra and Tri-State. The new Colorado bank will not bear the Zions name, however. Mr. Simmons said he wants to create a bank that isn't viewed as an outsider.

Colorado's banking market is currently led by two Minneapolis banking companies, Norwest Corp. and U.S. Bancorp., which hold more than 30% of the state's deposits.

Most of Vectra's management will remain in place, Mr. …