First Hawaiian Bank
parent buys into Midwest
First Hawaiian Bank's parent, extending its reach into the Midwest for the first time, signed a definitive agreement yesterday to acquire Fargo, N.D.-based Community First Bankshares Inc. for $1.2 billion.
The all-cash deal will give BancWest Corp. a financial institution with $5.5 billion in total assets and 155 branches in 12 states in the Southwest, Rocky Mountains, Great Plains and east to Minnesota, Iowa and Wisconsin.
BancWest, a wholly owned subsidiary of French giant BNP Paribas, will pay $32.25 for each Community First share. That's a 15.2 percent premium above Community First's closing price yesterday of $28 on the Nasdaq National Market.
"This is a union of two complementary and compatible banks that makes sense both strategically and financially," said Walter A. Dods Jr., chairman and chief executive officer of BancWest. "Community First's strength in SBA lending, indirect auto lending, centralized processing and customer-oriented branches fits Bank of the West perfectly."
The $1.2 billion purchase price is equivalent to 16 times 2003 earnings and represents a 14 percent premium to the average closing stock price of Community First over the past three months.
Honolulu-based BancWest, formed by the merger of First Hawaiian Bank and San Francisco-based Bank of the West in 1998, will have $44 billion in assets and serve 3.4 million accounts through more than 500 branches in 17 states, Guam and Saipan when the merger is completed. It is expected to close during the third quarter of this year. Community First branches will become part of Bank of the West at that time.
Boards of both banks and BNP Paribas have approved the transaction. The merger still needs approval from Community First shareholders and federal and state banking regulators.
Bank of the West has 296 branches in six Western states following a series of 13 acquisitions since 1990. The addition of the Community First branches will give Bank of the West branches in 10 new states, Arizona, Colorado, Iowa, Minnesota, Nebraska, North Dakota, South Dakota, Utah, Wisconsin and Wyoming. Community First also has branches in California and New Mexico, where Bank of the West currently operates. First Hawaiian Bank has 56 branches in Hawaii, two on Guam and one on Saipan.
"Because there is virtually no geographic overlap in our branch structures, this is a transaction that's about building, not cutting," said Dan McGrath, president of BancWest and CEO of Bank of the West.
Dods, in San Francisco yesterday for a board meeting, said there will be no branch closures as a result of the deal and that it will have no impact on First Hawaiian Bank employees.
"We'll be doing some consolidating, but at this time I don't know where the job cuts will come from," he said. "It will be very modest, but there will be zero impact on First Hawaiian."
Dods also said BancWest isn't through growing.
"We're going to continue to grow in the western United States," he said. "We're now in 16 (mainland) states. We're wide but not deep. We plan to do a lot of fill-in acquisitions to beef up the markets in those states."