Banc One plans to wait for hard times to buy bank

COLUMBUS, Ohio -- Banc One Corp. plans to wait for a slump in the U.S. banking business before it makes a major acquisition, its chief executive said.

The nation's 10th-largest bank has been "constantly talking" to banks it would like to acquire, only to be stymied by high bank stock prices and other factors that make a major purchase too expensive, said Chief Executive John McCoy.

Banc One probably won't change its tactics until U.S. bank executives, now buoyed by record profits and few lending problems, fall into harder times and lower their asking prices, he said.

"We're looking, but we won't do any dumb transactions that hurt our earnings," McCoy said in a telephone interview. "They're just too pricey now. I think we will have to wait for change in the banking cycle."

Wall Street has long speculated that McCoy would join big U.S. banks such as First Union Corp. and PNC Bank Corp. that participated in a record $66 billion in mergers last year. Aside from a $5 billion bid for Bank of Boston Corp. last summer that was quickly withdrawn, Banc One stayed out of the multi-billion mergers that occupied many of its peers.

Banc One would be wise to wait since its stock has been hurt in the past year by concern that McCoy, pressed to match major expansions by other banks, would make a big acquisition that would hurt earnings, said Anthony Davis, a Dean Witter Reynolds analyst.

"As long as price expectations remain high, it's in Banc One's best interest to wait," said Davis.

Banc One shares are up 25 percent in the past year, compared with a 35 percent jump in Standard & Poor's regional bank stock index. Banc One rose 3 to 34c Friday.

Banc One wants to make a major acquisition to reach its goal of becoming a national bank, McCoy said. The most likely move would be into the fast-growing Southeast or Southwest, McCoy said, though the Bank of Boston bid shows the bank isn't against a move into the more stable North "at the right price."

Banc One entered the Oklahoma City market with the purchase of Central Bank and Friendly Bank, which were merged into Bank One Oklahoma City in February 1994.

"We're constantly talking, and there will be one done at some point," McCoy said. "Our objective is to grow into a national franchise."

So far, Banc One has found potential sellers demanding far too high a price, he said. The cost of acquiring a bank has risen in the last year as most bank stocks jumped 50 percent or more.

Banc One has long been known as an acquisitive bank, the product of 100 acquisitions since 1968. The company now has 1,300 banking offices in 12 states, mainly in the Midwest and South. McCoy has a track record of taking out Banc- One's checkbook only when it won't hurt the bottom line.

The bank also can afford to wait, Davis said. Banc One plans to add $1.2 billion to annual profits by 1999 by cutting costs by consolidating the operations of dozens of state units, and making a push in consumer finance and other national businesses. Profit last year jumped 27 percent to $1.28 billion.

With that kind of growth, Banc One isn't pressed to boost profits with a big acquisition, Davis said.

"They can afford to wait," he said.

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