Wells Fargo May Be Premier California Bank/a Year after Crocker Merger

THE JOURNAL RECORD, February 25, 1987 | Go to article overview

Wells Fargo May Be Premier California Bank/a Year after Crocker Merger


SAN FRANCISCO (AP) - In a talk to analysts last fall, Wells Fargo & Co. Chairman Carl Reichardt shrugged off the rave reviews of his bank's billion-dollar acquisition of Crocker National Corp.

``There was no magic here,'' Reichardt said. ``No alchemy occurred.''

Alchemy or no, the banking company founded during the California gold rush struck it rich with Crocker in a transaction that surprised the industry when it was announced a year ago.

Despite a few nagging problems with foreign and real-estate loans, Wells Fargo has used the acquisition as a springboard to better cost savings and smoother growth than even it foresaw.

It also has brought a growing reputation as one of the best-run banks in the West.

Now the 10th largest bank in the nation and third biggest in the state behind Bank of America and Security Pacific, Wells Fargo is staking a claim as California's premier bank.

``The only other California bank that comes close is Security Pacific,'' said Stephen Berman, an analyst for Nomura Securities in New York. ``By the end of '87, there will no longer be any debate about that.''

Virgil Cilli of Keane Secrities Co. said, ``Wells Fargo is now No. 1, and it has a very good chance to take (further) advantage of BankAmerica's troubles and Security Pacific's loan losses'' among its top California competitors.

Since the burly Reichardt took the helm in 1983, Wells Fargo has cultivated its reputation for aggressive cost-slashing and narrowed its focus more to retail banking and a few other operations in its home state.

But it was the $1.07 billion acquisition of neighboring Crocker, which had been the state's fifth largest bank, that underscored Wells Fargo's status as a powerhouse in California banking.

Wells Fargo is expected to finish digesting the deal by the end of this year. The number of employees is down to 21,000 from the 26,000 when Crocker was formally purchased from London Midland Bank PLC last May 30.

While some Crocker managers are suing Wells Fargo over their dismissals, investors and consumers have heartily endorsed the acquisition.

The company's stock price has climbed by close to 75 percent since the deal was announced on Feb. 7, 1986. Customer deposits grew by $1.1 billion in the first full quarter for the consolidated bank, which boosted Wells Fargo's share of deposits in California financial institutions to 8.5 percent from 5 percent.

Profits soared 44 percent to $273 million for 1986, and Reichardt promises 1987 will be better.

Wells Fargo also is closing in on the targeted $240 million in savings on Crocker's expense base that it had estimated might take two years toachieve.

``Clearly, it was one of the most sharply positive events in banking in recent years,'' said Brent Erensel, an analyst at Dean Witter Reynolds Inc. …

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