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Valley Bank & Trust Co. is being put up for sale by its cash-strapped owner.

Michael Danielson, president and chief executive of Salt Lake-based Valley Bank & Trust - also known as Valley Utah - said the Valley National Corp., which acquired Valley Utah in 1987 and is based in Phoenix, Ariz., is focusing its operations on Arizona and "the sale of Valley Utah is part of that effort."First Boston Corp. of New York has been retained by Valley National to solicit offers for Valley Utah and another of its subsidiaries, California Valley Bank. With 35 branches in Utah, Valley Bank & Trust is the state's third largest bank with assets of more than $1 billion at the end of 1989.

Danielson termed the pending sale a very good opportunity for the Utah bank.

"Recent consolidations and reorganizations by Valley Utah have left the bank in an already lean and competitive position," he said. "We anticipate it will be business as usual through this process."

Sources in the banking industry said likely buyers of Valley Utah would be such out-of-state banks as BankAmerica, which acquired the Salt Lake office of Western Savings of Arizona last week, Wells Fargo in California and Security Pacific and U.S. Bank in Oregon. First Security Corp. and Zions Bancorp in Salt Lake City might also be candidates to acquire Valley.

Danielson said he believes the bank will sell at a premium to its book value, currently $66 million. He estimated the sales process will take nine to 12 months. "By the time you settle on a potential buyer, they do their due diligence, come to terms, get regulatory approvals, we're looking at the first of next year."

He said the bank is in a solid capital position with primary capital to assets ratio at 8.27 as of April 30 vs. regulatory requirements of only 5.5.

Danielson said he called a meeting of some 110 Valley managers at 7 a.m. Wednesday to inform them of the decision to sell the bank. The word was then passed on to the bank's 610 employees. "We told them we would keep them current on the situation," said Danielson. "We were bought several years ago and things have remained relatively the same. Instead of an owner in Arizona, we'll have an owner somewhere else."

Valley National has lost money for the past several years, including a $149 million loss in 1989. For the first quarter 1990, the bank holding company earned $607,000. Problems have been tied to the troubled Arizona economy, particularly real estate, which has negatively affected all of the state's financial institutions, not just Valley National.

By contrast, Valley Utah has remained profitable, earning $1.16 million in the first quarter 1990.

Despite Valley National's problems and the decision to sell the Utah operation, Danielson termed the three-year marriage a good one.

"I think it's been a happy relationship. It's provided us services we couldn't provide in the past. The corporate trust area has been strengthened, as have policies and procedures. Also audit reviews and some of the operational `back room' aspects have been improved. It's been a positive marriage and I look forward to the new ownership being just as positive."

Valley National's stock is currently trading at $16 with a book value of $22.

Valley Bank and Trust Co. was founded in 1948 by a group of South Salt Lake businessmen with total assets of $75,000.

Richard J. Lehmann, chairman of Valley National, said in a statement from his Phoenix headquarters that the sale of Valley Utah and California Valley will "permit us to build upon the core strength of our Arizona franchise . . . it will also strengthen our financial structure."