Other large out-of-state banks with California holdings, including Minneapolis-based U.S. Bancorp and Detroit-based Comerica Inc., are considered potential buyers and sellers. If these so-called super-regional banks began merging, it could trigger another wave of consolidations similar to those in the 1990s that claimed most of California's biggest banks and savings and loans.
This much seems certain: The number of takeover targets is shrinking. Today there are fewer than 300 California-based banks, down from more than 400 a decade ago, with most experts predicting a continued decline.
"There will be more mergers, particularly now that there is more confidence that the economy is going to be better," predicted Wells Chairman Richard Kovacevich, who headed Minneapolis' Norwest Corp. when it bought the old Wells Fargo in 1998. He has since made 66 acquisitions of financial companies across the West and Midwest, including 21 banks.
Kovacevich said he sees room for Wells to add 400 to 500 branches in California alone, but high prices made it tough during 2001 and 2002. "Now, prices are down," he said. Three months ago, Wells agreed to buy Seattle-based Pacific Northwest Bancorp, with 58 offices and $3 billion in assets, for about $600 million in stock.
One notable naysayer is consolidator John M. Eggemeyer III. He merged seven banks into Newport Beach-based Western Bancorp and sold it to U.S. Bancorp for $1 billion in 1999. He has since combined 11 banks into Rancho Santa Fe-based First Community Bancorp, which will have $2.3 billion in assets when his latest deal, for Glendale's Verdugo Bank, is done.
Despite data showing that the average California bank sells for about 1.8 times its net worth -- down from 2.1 times net worth in 2001 -- Eggemeyer said he doesn't see his targets cutting prices.
Meanwhile, bank watchers are looking for a resurgence of bigger deals that could kick the mergers into high gear. Potential seller Borba of CVB declined to be interviewed. But the bank's CEO, Wiley, said the dairyman "still gets up every morning at 4:30 and heads for the corral."