Last man standing

At the April Corporate Club Breakfast, the regional head of the former Star Bank (now Firstar) told local business execs that his financial institution was well-positioned to survive any merger and acquisition shake-out in the banking industry.

“There are more and more consolidations occurring as banks try to cover the U.S. from coast to coast,” said Andrew Randall, executive vice president and regional chairman. “Firstar could be part of that consolidation.”

But unlike Key Corp and National City Bank, both considered by industry experts to be prime future targets for consolidators, Firstar most likely would be on the acquiring end of any deal. That’s because the recent merger between Star Bank and Milwaukee-based Firstar not only strengthened its assets (from $17 billion to $39 billion) and reach (from four states to eight), but also allowed the new company to retain Star Bank’s high performing stock ratio (53 times earnings last year).

That high earning multiple made Star the top performing bank stock in the U.S. last year and provides Firstar with a powerful bargaining chip in any merger talks.

But, says Randall, the stock’s strength has forced Firstar to make its acquisition strategy a very calculated equation. “We view the price of our stock as an asset. It gives us a very strong currency to acquire or merge. But it has to be a complementary bank, and finding those opportunities is really a matter of finding the banks who want to be a part of what we do. And it has to be able to avoid dilution of our stock value.”

That said, Randall said Firstar views Cleveland as a growth market and expects the bank to continue its upward surge along with the city.

SBN is a sponsor of the Corporate Club breakfast, which is conducted in an interview format and is followed by a question and answer period. The events are held Tuesday mornings at Executive Caterers at Landerhaven, with breakfast at 7 a.m. and the speaker at 7:30. Cost is $25 per person.