A Fusion of Conventional and High-Tech Accounts : Northern California Business Banks to Merge
Two successful business banks in Northern California have agreed to merge, creating a strong new competitor in Silicon Valley and an inviting acquisition target when interstate banking arrives in 1991.
The merger will bring together the owners of Plaza Bank of Commerce, with assets of $448 million and headquarters in San Jose, and Silicon Valley Bank, which is located in Santa Clara and has assets of $304 million.
The resulting bank will be called Plaza + Silicon Valley Bank of Commerce. Jack W. Conner, chairman of Plaza, will be chairman of the new institution and Roger V. Smith, president and chief executive of Silicon Valley, will be its CEO.
“It is a very intelligent deal,” said Robert Huret, senior consultant at the San Francisco investment firm of Montgomery Securities. “It merges two banks with excellent performance records and complementary skills.”
Both banks specialize in a market of small and medium-sized businesses and are highly rated performers among industry analysts. Plaza emphasizes banking for service-industry companies and traditional businesses while Silicon Valley has built a strong customer base among the technology firms in the region.
Conner said there is little overlap between the banks. “We are a nuts-and-bolts kind of lender and they have this technology expertise and the merger just seemed to make an awful lot of sense.”
Conner said a Plaza director and Silicon Valley director, who are friends, had been boasting to each other for a long period about the quality of their two banks. He said that about six weeks ago, the directors suggested that Conner and Smith get together to discuss a possible merger.
The resulting deal, which was announced Wednesday, must be approved by shareholders of both institutions and regulators at meetings scheduled for this fall. The transaction involves exchanging shares of Silicon Valley for Plaza Commerce in a ratio to be determined later.
Full interstate banking is set to begin in California in 1991. That means banks from outside the West will be able to take deposits and acquire banks in the state for the first time.
As successful commercial banks in a prosperous and growing area, Plaza and Silicon Valley would have been inviting targets for acquisition in 1991 without the merger. But the combined bank, with assets of $750 million, probably willcome under even closer scrutiny from outside institutions because of its new size and customer base.
Conner acknowledged that the new bank will be more visible to outsiders. But he said the added size and combined expertise also will create an institution that can compete more effectively with big California banks, such as Wells Fargo, and outsiders who arrive in 1991.
