So, here we are again, back at square one in what has so far been the most compelling Utah business story of the new millennium: the undoing of the Zions Bancorp and First Security Corp. merger, followed immediately by First Security throwing in with Wells Fargo.
Attempts to compare how the new Wells Fargo deal affects shareholders, employees and customers of First Security against how they would have fared under the former Zions merger are difficult; apples and oranges come to mind.
There's no question that First Security shareholders would have done better, at least in the short term, if the original stock swap agreement had gone through: 0.442 share of Zions vs. 0.355 share of Wells Fargo for each of their shares.
But that's like saying Salt Lake City would have been better off if the tornado hadn't come through here last year. The reality is that the market changed dramatically between the time the "merger of equals" was first announced last June and the time that Zions' shareholders turned thumbs down on the deal 10 months later.
Kelly K. Matthews, First Security's chief economist, is an employee of the bank, and thus not the most unbiased source for commentary on the pros and cons of the new deal, but he's also a FSCO shareholder and he says he's hanging onto his shares once they are converted into Wells Fargo.
"As a group, First Security stockholders have grown and prospered for a long time, and that same strategy with Wells Fargo will produce the same results," he said Friday.
True, many stock traders in this market measure a "long time" in minutes, not years, but the Wall Street bloodletting of the past week just may convince them that their fathers' mantra of "buy and hold," may now be coming back to haunt them.
But what about First Security's customers? First, they were told that the Zions/FSCO merger would be great for them because it would keep a big, powerful bank right here in Utah.
Now First Security is telling them it's a good deal because big, powerful Wells Fargo can offer them all kinds of products and services that only a mega-bank can. The fact that it's based out of state? No problem.
Actually, I think the second argument may be more powerful than the first. Sure, it would have been nice to have the "new" First Security based here; local companies create more jobs and tax base and they boost the overall economy more than do subsidiaries.
But for most banking customers it shouldn't make much difference. You can't convince me that the "new" First Security would have made questionable loans to local business just because they were local. I imagine the expanded Wells Fargo will be just as happy to make good loans here as anyone else, or why bother to come here at all? Remember Henry Potter (Lionel Barrymore), the mean banker in "It's a Wonderful Life"? He was local, too, but it didn't do the residents of "Bedford Falls" any good.
All this assumes that the acquisition of First Security by Wells Fargo will get a thumbs up from government regulators and both banks' shareholders. We used to think those were just formalities, but now know better.
But what about all the branches that will have to be divested to make this deal work with the antitrust watchdogs? You'll recall that the U.S. Justice Department required Zions and First Security to shed 68 branches with $2.7 billion in deposits and loans to make their deal work. First Security and Wells Fargo now estimate they will have to sell off about $1.2 billion.
That would seem like an invitation for Honolulu-based BancWest Corp, which had earlier agreed to buy the 68 branches under the previous plan, to jump back into the bidding under the new deal. They may, but the bank's subsidiary, San Francisco-based Bank of the West, won't comment on that possibility.
But the new divestitures won't have the same impact as the Zions deal. Where Zions and First Security went head-to-head in Utah and Idaho, First Security and Wells Fargo likely won't have competitive problems except in Nevada and New Mexico.
E-mail (max@desnews.com) or fax 801-236-7605. Max Knudson's column runs each Monday.