Wells Fargo Buys Crocker From Midland for $1 Billion
Wells Fargo has agreed to buy British-owned Crocker National for more than $1 billion in the biggest merger in U.S. banking history, the companies announced today.
The deal nearly doubles Wells Fargo’s presence in California, adding Crocker’s $15 billion in deposits to Wells Fargo’s $17.7 billion. The new bank, to be called Wells Fargo Bank, becomes California’s third-largest bank.
“The Crocker Bank branch system has substantial strength throughout California, particularly in the southern part of the state where the Crocker Bank system is highly complementary to our own,” Wells Fargo Chairman Carl E. Reichardt said. Crocker and Wells Fargo have a combined total of 619 branches across the state.
San Francisco Base
Both banks are based in San Francisco and have long California histories. However, since last May, Crocker has been wholly owned by a major British bank, Midland Bank PLC.
Wells Fargo officials said some of the branches of the combined bank will be closed because their service areas overlap. Some jobs probably will be eliminated as Wells Fargo eliminates duplication in the two banks’ operations, a spokesman said.
The purchase price is $1.08 billion, to be paid in cash and newly-issued Wells Fargo common shares. The sale--which is subject to regulatory and shareholder approval--should close this year, Wells Fargo said, and the company expects Crocker to begin contributing to profits in two to three years.
Many analysts wondered why Midland would sell Crocker so soon after completing its acquisition of the troubled California bank. Crocker had lost more than $330 million in 1983 and 1984 combined before posting a modest $38-million profit in 1985. Crocker’s problems were primarily in its foreign, real estate and agricultural loans.
Favorable Move
Analysts said the deal appeared to be favorable for Wells Fargo, because Midland had transferred the bulk of Crocker’s problem foreign and real estate loans to a separate subsidiary. Under the merger, Midland will keep that $3.5 billion in troubled loans.
