Wells Fargo Wants Southwest Bank : Acquisition Would Expand Presence in San Diego County

Wells Fargo, which has been expanding its presence in Southern California through bank acquisitions, has made a surprise bid for Southwest Bancorp, the Vista-based parent company of Southwest Bank.

Southwest President Frank Mercardante, who disclosed the offer Thursday, said it had been received Tuesday. He would not disclose the price that Wells Fargo offered, and a spokeswoman for the big San Francisco bank holding company declined to comment.

Southwest, with $375 million in assets and 14 branch offices in northern San Diego County, attracted Wells Fargo’s interest, according to banking industry consultant Gerry Findley of Brea, because “Wells has been looking for market share in San Diego.” He added, “Wells has been pretty aggressive down there.”

Mercardante said Southwest’s board will study the offer and “will respond to Wells as quickly as possible.” He would give no timetable for a response, but he did say that Southwest’s branches “would obviously complement Wells Fargo’s overall business strategy.” Wells Fargo, California’s third-largest bank with $45 billion in assets, about 450 branches statewide and 22,200 employees, is one of the nation’s most profitable banks. It has 18 branch offices and 455 employees in San Diego County.

Despite Wells Fargo’s $1.07-billion acquisition of Crocker National Bank in May, 1986, it still has most of its branch locations in Northern California. But it is continuing to look for smaller banks to buy in order to expand its branch total in Southern California.

On June 1, Wells Fargo completed its $125.7-million acquisition of Barclay’s Bank of California, the state’s 17th-largest bank with $1.3 billion in assets and 50 branches, half of which were in Southern California.

Southwest Bank, a general commercial bank, reported an operating profit during the third quarter, which ended Sept. 30. However, that profit was eclipsed by losses at Southwest Bancorp’s mortgage banking and thrift and loan businesses.

Southwest Bancorp reported an $89,000 net loss for the third quarter, compared to a $4.2-million loss during the same quarter a year ago. Southwest Bancorp reported a $1.2-million net loss for the first nine months of 1988, compared to a $3.6-million net loss for the same period a year ago. Southwest recently closed the troubled thrift operation.

Southwest’s shareholders should welcome Wells Fargo’s bid, Findley said. The company’s stock has recently traded below the firm’s book value of $2.42 per share. However, the stock moved up 50 cents Wednesday to $2.875 before trading was stopped and went up another 75 cents to $3.625 on Thursday, with 20,700 shares trading hands.

During the past year, Wells Fargo has been courting San Diegans with a heavily advertised “San Diego CD,” a certificate of deposit that offers higher-than-average rates on six-month deposits.