Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: WEDNESDAY, September 6, 1995 TAG: 9509060140
SECTION: BUSINESS PAGE: B8 EDITION: METRO
SOURCE: ASSOCIATED PRESS
DATELINE: ATLANTA LENGTH: Medium
Charlotte, N.C.-based NationsBank, the nation's third-largest bank and already the biggest in Georgia, said Tuesday it has an agreement to acquire Atlanta-based Bank South for $1.6 billion in stock.
The deal, the latest in a series of mergers in the banking industry, would solidify NationsBank's position in the robust Atlanta market and take away another of the few remaining banks that call the city home.
The proposed merger also could serve as a pre-emptive move by NationsBank to prevent other competitors from entering the Atlanta market by acquiring Bank South, long considered an attractive takeover target.
``It's going to be tough to get into the Atlanta market,'' said John A. Pandtle, a banking industry analyst at The Robinson-Humphrey Co. in Atlanta.
Bank South, the fifth-largest bank in Georgia with assets of $7.4 billion, has 149 branches in Georgia, including 60 in-store branches at supermarkets. Its network of 267 automated teller machines is the largest in the state.
NationsBank, formed in 1990 by the merger of Charlotte-based NCNB Corp. and Atlanta- and Norfolk-based C&S-Sovran Corp., has $18 billion in assets in Georgia and 189 offices. Overall, the company has $184 billion in assets and operations in nine states and Washington, D.C.
As with other deals, the NationsBank-Bank South merger plans include eliminating jobs and closing branches.
The merger will result in a substantial number of branches to be closed and an undetermined number of jobs cut, said Ken Lewis, NationsBank president. The merged bank will continue the supermarket operations, he said.
Though many branches will be closed, many of the jobs will be transferred to the offices that remain open because of increased business at those locations, Lewis said.
The acquisition, unanimously approved by the boards of both companies, provides for each share of Bank South common stock to be exchanged for 0.44 of a share of NationsBank common stock, making the purchase price about $27 a share at the time the deal was announced.
Bank South was up 9.4 percent, or by $2.18 3/4 a share, to close at $25.43 3/4 Tuesday on the Nasdaq market. NationsBank fell 1 percent, or by 62 1/2 cents, to close at $60.87 1/2 a share on the New York Stock Exchange.
The deal is sure to raise a number of antitrust issues but none that are likely to derail the merger, said Stephen Willard, a former federal bank regulator, now a Washington attorney specializing in mergers.
``I don't see any deal breakers,'' Willard said.
For example, the Justice Department might impose some conditions on which branches are closed, primarily to make sure that ``underbanked'' neighborhoods don't lose any offices, Willard said.
While large, regional banks have come to dominate the business, Bank South carved a niche by promoting a smaller-is-better theme.
After the bank suffered a $55 million loss in 1991, former C&S executive Patrick L. Flinn was brought in as chief executive officer and engineered the bank's rebound.
A 1992 advertisement portrayed a customer whose life was turned upside down by faceless bankers in North Carolina. Though NationsBank never was mentioned in the ad, the campaign was widely seen as targeting the giant bank. Other big North Carolina banks include First Union and Wachovia.
Recent ads have been somewhat softer, however, emphasizing the convenience of Bank South's weekend and evening hours.
Some customers may be alienated by the merger, Willard said.
``There is a risk that Bank South's advertising has been too good. It may have convinced some people not to go to NationsBank,'' he said.
But Lewis said the merged bank will be able to offer the best of both worlds. ``We'll emphasize convenience and breadth of service,'' he said.
by CNB