Merger mania in the Utah financial services industry struck again Monday when Zions First National Bank said it has agreed to acquire Draper Bank & Trust.
The acquisition would result in two Draper Bank branches and one Zions Bank branch being closed.
Terms of the deal were not disclosed, although Zions said it would be structured as a stock swap in which shares of Draper Bank would be exchanged for Zions' stock at an unspecified ratio. For accounting purposes, it would be structured as a tax-free "pooling of interests."
The merger is expected to close in the first quarter of 2001, subject to the usual government regulatory approvals.
Asked why the share-swap ratio isn't being revealed, George Hoffman, Zions' executive vice president for retail banking, said the deal is small enough that the typical disclosures mandated in larger deals are not required. For example, this acquisition is not subject to a vote of Zions Bancorp shareholders, as was the First Security merger those shareholders voted down.
But Draper Bank shareholders must approve it. Bob Daugherty, president and CEO of Draper Bank, said a meeting has been scheduled for Jan. 22 when the 325 shareholders of the closely held company will vote on the deal. He said most of them are Utahns and some have held stock in the company since it was launched in 1964 by Utah banker Dewey Bluth and others.
Daugherty said Zions' "community banking approach" is compatible with his bank's way of doing business and should be beneficial to both customers and employees of Draper Bank.
"This merger will allow us to provide our customers a broader array of financial products and services while maintaining the community-oriented philosophy that has made us successful," said Daugherty, adding that he would become a senior vice president in the Zions organization.
A. Scott Anderson, president and CEO of Zions Bank, said the acquisition "enhances our presence in the important growth
areas in the south end of the Salt Lake Valley. We are impressed with Draper Bank's management, employees and customer base and also with its growth and performance."
Draper Bank has seven branches, all but one in Salt Lake County. These include Draper, Murray, Riverton, Sandy, South Jordan and West Jordan. It also has a branch in Park City that is known as Park City Bank — A Division of Draper Bank.
Zions said that because some Zions Bank and Draper Bank branches are located in close proximity, three of the branches will be closed, but Anderson said no Draper Bank or Zions Bank employees would lose their jobs because of the merger, although some would likely have to shift to a different Zions office.
"We are especially thrilled to welcome the employees of Draper Bank, each of whom will be offered positions within the Zions Bank organization," said Anderson.
The Zions Bank office at 1207 E. 12300 South, Draper, would be merged into the Draper Bank office at 12271 S. 900 East, Draper.
The Draper Bank branch at 10380 S. Redwood Road in South Jordan would be merged into the Zions Bank office inside the Smith's Food and Drug Center, 1634 W. South Jordan Parkway, South Jordan.
And the Draper Bank office at 195 E. 6100 South in Murray would be consolidated into the Zions Bank branch at 5595 S. State, Murray.
Draper Bank's remaining offices in Draper, Riverton, Sandy, West Jordan and Park City would become branches of Zions Bank. With the addition of the Park City office of Draper Bank, Zions would have two banking offices in the resort town.
Zions Bank's most recent acquisition was in 1997 when it acquired Tri-State Bank of Idaho. Zions Bancorp acquired County Bank, Prescott, Ariz., last summer. Zions currently operates 120 full-service branches in Utah, 21 in Idaho and some 200 automatic teller machines in the two states.
In late morning trading Monday, Zions Bancorp shares were down $2.44 (4.60 percent) at $50.50.
E-MAIL: max@desnews.com