Magazine article American Banker

Utah's First Security Zooms on Speculation of Takeover

Magazine article American Banker

Utah's First Security Zooms on Speculation of Takeover

Article excerpt

Shares of First Security Corp. climbed more than 5% in an unsteady market Wednesday as takeover speculation about the Salt Lake City banking company gained momentum in the wake of its failed merger with cross-town rival Zions Bancorp.

The collapse of Zions deal has sparked widespread talk on Wall Street that the $23 billion-asset First Security will probably go partners with or be bought by a banking company other than Zions. Among the names mentioned most often are BancWest Corp., a $17 billion-asset company based in Honolulu, and Wells Fargo & Co. in San Francisco.

First Security is trading at a premium, which suggests that the market believes that it will be acquired, said Erick J. Reim, an analyst at U.S. Bancorp Piper Jaffray in Minneapolis. "They made the move to sell, and they are likely to follow through with that," he said. "Somebody is definitely going to take a run at them."

BancWest is considered a strong possibility because it has already done due diligence on First Security, analysts said. BancWest was planning to buy 68 branches that were to be divested after a First Security-Zions merger.

Executives at BancWest have said they are interested in First Security, a source close to the company said. BancWest did not return phone calls.

"BancWest is a relatively active acquirer, and they are on the prowl," said Mr. Reim. "Management has said that they want to expand in the United States. First Security is in extremely attractive, high-growth markets."

Wells Fargo is also a strong contender because it is an efficient acquirer and has a strong price-earnings multiple, said Sean J. Ryan, who heads up the independent research firm Byrne, Ryan & Co. in White Plains, N.Y. The company is also adept at the mortgage business, which has been under siege as interest rates rise.

"Wells has credibility in the market, which not many suitors have," said Mr. …

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