First Bank System to Buy U.S. Bancorp of Oregon (Published 1997)

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First Bank System appears to have finally reached the Pacific. The acquisitive Minneapolis banking company, which tried unsuccessfully a year ago to buy the First Interstate Bancorporation of Los Angeles, said yesterday that it had agreed to buy U.S. Bancorp of Portland, Ore., for $9 billion in stock.

First Bank, which will assume the U.S. Bancorp name though it will keep its Minnesota headquarters, will become the nation's 14th-largest banking company, with $70 billion in assets. It will serve 17 Midwestern and Northwestern states, with the largest share of deposits of any bank in Idaho, North Dakota and Oregon. It will rank second in Colorado, Minnesota and Nebraska.

Each U.S. Bancorp share will be exchanged for 0.755 share of First Bank -- valued on Wednesday at $59.08, a 22 percent premium over U.S. Bancorp's closing stock price.

As is usual after mergers are announced, the shares of the acquiring company, First Bank, fell yesterday -- by $2.75, to $75.50. The shares of U.S. Bancorp jumped $6.875, to $55.125. The deal was reported yesterday in The Wall Street Journal.

First Bank agreed to pay stock worth 3.4 times U.S. Bancorp's book value, a phenomenally high price for a bank. The average price last year was 1.9 times book value. Nonetheless, First Bank said it would increase its earnings per share by the middle of next year.

''They paid a full price but got something that was worth a fortune,'' said Thomas Hanley, a bank analyst with UBS Securities. ''God isn't going to make another dominant bank franchise in the Northwest.''