NEW YORK _ It's been months since the banking industry has
seen a mega-merger like the pairing of California giants
BankAmerica Corp. and Security Pacific Corp.
But the absence of huge deals doesn't mean a slowdown in bank
mergers. On Tuesday, for example, Chemical Banking Corp.'s Texas
affiliate, Texas Commerce Bankshares, agreed to buy Ameritrust
Texas Corp. for $130 million.
Also Tuesday, ABN-Amro Holding NV agreed to acquire Cragin
Financial Corp. of Illinois, a $2.8 billion savings bank, in a
stock swap valued at $500 million.
"While we've seen some slowing in the larger combinations,
we've seen an ongoing backing and filling process," said Frank
Barkocy, senior vice president at Advest Inc., a regional
Large regional banks are strengthening their positions and
market share through small mergers that don't grab the
Two banks that have skillfully used this strategy are Norwest
Corp. of Minneapolis and KeyCorp of Albany, N.Y.
Between 1990 and February 1993, Norwest has grown
aggressively, with 23 acquisitions of banking, insurance and
finance companies. The deals, some of which are pending, added
$18.5 billion in assets to Norwest, the nation's 15th largest
Norwest has managed its rapid growth while maintaining a
strong balance sheet: its Tier 1 capital to assets ratio, a
measure of a bank's ability to absorb sudden losses, is 10.4
percent, far exceeding the 4 percent minimum. Management predicts
13 percent annual growth in per-share earnings.
One of Wall Street's most critical bank analysts, George Salem
of Prudential Securities Inc., had glowing praise for Norwest in
a research report issued last week.
"It is among a handful of (bank holding companies) that are
ahead in the race to become truly national," Salem said.
Richard Kovacevich, Norwest's president and chief executive
officer, said in a recent interview the company's strength comes
from the diversity of its businesses: banking, insurance,
mortgages and consumer finance.
"Analysts have suggested, and we tend to agree, that we are
somewhat of a prototype for what I think banking is going to be,"
"If you really look at revenues in this industry, they are not
(from) large corporations. The revenues are (from) the consumer
business, the small business . . . we're simply reflecting our
Norwest's earnings also reflect its diversity: 55 percent
comes from its community banking businesses; 30 percent from its
consumer finance company, Norwest Financial; 10 percent from a
mortgage company, Norwest Mortgage; and 5 percent from corporate