ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Saturday, August 31, 1996 TAG: 9609030040
SECTION: BUSINESS PAGE: A6 EDITION: METRO
DATELINE: ST. LOUIS
SOURCE: ASSOCIATED PRESS
THE DEAL with Boatmen's Bancshares Inc. is the third-biggest bank merger in U.S. history.
NationsBank has taken a big step toward living up to its name with an agreement to buy Boatmen's Bancshares Inc. for $8.7 billion, the Southern bank's first foray into the Midwest.
The deal, announced Friday, is the third-biggest bank merger in U.S. history and will raise NationsBank one spot to become the nation's fourth-largest bank. It continues the industry's drive to become more competitive by creating larger institutions.
``This is a big step forward'' in NationsBank's quest to be a nationwide bank, said Michael Ancell, an analyst at the brokerage Edward D. Jones & Co.
The two banks said the deal would create a huge lender with $230 billion in assets. That would put it ahead of all but No.1 Chase Manhattan Corp., Citicorp and BankAmerica Corp., the nation's No.3 bank.
Boatmen's has been buying up smaller banks itself during the past 10 years. It now has the biggest market share in Missouri, Kansas, Arkansas, Oklahoma and New Mexico, but has not entertained visions of expanding nationwide on its own.
``It fills in a big part of the map for NationsBank,'' said James Weber, an analyst at A.G. Edwards & Sons, another brokerage. ``This goes a long way to NationsBank becoming a national institution, but they still have some work to do.''
Boatmen's, which is based in St. Louis, ranks 24th among the nation's banks with $41 billion in assets. It claims to be the oldest west of the Mississippi River, having been founded in 1847 as a savings institution for men who worked on the riverboats.
Meanwhile, NationsBank is the nation's fifth-largest bank. Based in Charlotte, N.C., it has branches in nine states, mainly in the South and Washington, D.C. It had assets as of June 30 of $192 billion.
After the deal, the new NationsBank will have branches in 16 states and 13 million customers.
Hugh L. McColl Jr., chairman and chief executive of NationsBank, said his bank has no short-term plans for further purchases, but noted the Boatmen's expansion into the Midwest opens the door for movement westward.
The post-merger NationsBank will retain its name and its headquarters. McColl will be chief executive of the merged company. Andrew B. Craig III, chairman and CEO of Boatmen's, will be its chairman.
NationsBank said it expects to save $335 million annually as a result of the deal, a combined expense savings of 5 percent. The savings will come from consolidating operations and business lines, and from exercising more leverage with vendors.
McColl said some jobs will be lost and some branches closed as a result of the merger. He said NationsBank will freeze hiring in the near future and hopes to cut costs through job attrition.
Matthew Lee, a community activist in New York who has been a critic of large bank mergers, said the combination would hurt customers who rely on their local branches, particularly for small business loans.
Terms of the deal call for NationsBank to pay the equivalent of 0.6525 share of its stock for each Boatmen's share. Boatmen's shareholders can choose cash or stock or a combination, as long as at least 60 percent of the total payment is in stock.
NationsBank's purchase is expected to close in January 1997 after shareholder approval and clearance from regulators.
LENGTH: Medium: 69 linesby CNB