Chairman: Rainier’s Days of Independence Numbered Before Merger
SEATTLE (AP) _ Security Pacific Corp.’s acquisition of Rainier Bancorporation should satisfy the bank holding company’s appetite for a major merger for a while, according to Security Pacific President George F. Moody.
Moody and G. Robert Truex, chairman and chief executive of Rainier, told a news conference Wednesday the merger represented a union of two of the West’s strongest bank holding companies.
Rainier and Los Angeles-based Security Pacific announced Tuesday they would merge in a stock swap valued at more than $1.1 billion. Security Pacific’s board of directors approved the deal on Wednesday.
Moody indicated that with the acquisition of Rainier, Security Pacific - which has made several smaller acquisitions since mid-1986 - probably would put possible acquisitions in Texas on hold.
″Security Pacific is satisfied with its Pacific Rim expansion,″ he said.
Truex said that given the ongoing consolidation in the banking industry, Rainier had expected to become an acquisition target.
″There’s a feeding frenzy out there,″ Truex said, referring to bank acquisitions. ″There are 15,000 banks in the United States. In the next five or 10 years there will be considerably less.″
Rainier, Washington’s second-largest banking company after Seafirst Corp., was not actively seeking a merger when it was approached by Security Pacific bank knew it eventually would be acquired by a larger institution, said Truex.
″Sooner or later we would have had to acquiesce in an acquistion effort,″ he said. ″If we were not able to remain independent over an extended time, we wanted to choose our partner. In Security Pacific, we could not have found a better partner.″
The Security-Rainier merger still requires approval by both corporations’ shareholders and from federal regulatory authorities.
Truex said the offer from Security Pacific was too good to refuse. Without the takeover speculation, Rainier’s stock probably would be selling in the low $30 range, he said. Now its shareholders will get the equivalent of about $50 a share in a tax-free swap, he said.
Under the terms of the merger, Rainier will head up Security Pacific’s operations in the Northwest. Rainier will retain its own management and name, with the added description, ″A Security Pacific Company,″ and will remain based in Seattle, Truex said.
Rainier customers stand to benefit from Security Pacific’s technological capabilities, its capital markets activities and its peformance in mutual funds, Truex said.
Security Pacific will gain further access to growing markets in Washington, Alaska and Oregon and benefit from Rainier’s business in Asia, Moody said.
Truex characterized the merger as essentially allowing Rainier to achieve status as a giant ″super-regional bank,″ a status it probably could not have acquired on its own. The Northwest, with just 4 percent of the U.S. population, could not match a California bank’s power in setting up a competitive super-regional institution, he said.
After the merger, scheduled to be closed this fall, Security Pacific would have total assets of $72 billion. That would make it the nation’s seventh- largest bank holding company, accounting for the pending merger of Chemical New York Corp. and Texas Commerce Bancshares Inc., of Houston.
Security Pacific, with $62.6 billion in assets, is the nation’s sixth- largest bank holding company. Rainier had $9.2 billion in assets as of year- end 1986.
The merger would be one of the biggest U.S. bank acquisitions ever. Chemical’s acquisition of Texas Commerce was valued at about $1.19 billion, but the price is highly contingent on Texas Commerce’s future earnings.