THE VIRGINIAN-PILOT
Copyright (c) 1996, Landmark Communications, Inc.
DATE: Tuesday, November 5, 1996 TAG: 9611050272
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: By TOM SHEAN, STAFF WRITER
LENGTH: 53 lines
Southern National Corp., parent of the BB&T banks in the Carolinas and southeastern Virginia, announced an agreement Monday to acquire United Carolina Bancshares Corp. in a deal worth almost $1 billion.
Their combination will have more than $25 billion of assets, almost 500 branches in three states and 20 percent of the bank deposits in North Carolina, the banking companies announced.
Southern National was formed in early 1995 from the merger of Southern National and BB&T Financial Corp., parent of Branch Bank and Trust.
Shortly before that transaction, BB&T had acquired the Virginia Beach-based community bank Commerce Bank. Commerce Bank's name was changed in July to BB&T.
Southern National, based in Winston-Salem, N.C., has agreed to exchange 1.135 shares of its common stock for each of United Carolina's 24.24 million common shares.
Southern National's stock slipped 50 cents per share to close at $34.75 on the New York Stock Exchange Monday. United Carolina's stock, which trades on the Nasdaq National Market System, soared $8.50 per share to close at $36.
Part of what makes the merger attractive is the opportunity to gain greater efficiency, said Southern National chairman and chief executive officer John Allison. ``We have identified $65 million in annual cost savings,'' he said.
Some of the savings will come from closing about 80 branches and reducing the combined work force by about 1,000 positions, Allison said. Many of the job cuts will be absorbed by an early-retirement program and normal turnover among employees, he said.
Southern National, with assets of $21.1 billion, has 8,500 employees and 425 branches, including 21 BB&T branches in Hampton Roads. United Carolina has $4.37 billion of assets, about 2,000 employees and 153 branches.
The merger will create the 30th largest banking company in the country, the two companies said.
Allison said he expects the merger to dilute Southern National's earnings for 1997 by about 8 cents per share and to contribute to earnings in 1998.
Southern National's offer is nearly three times United Carolina's book value. That's higher than the average offered in bank mergers so far this year, but the prospect for increased earnings is a better indicator of whether a deal makes sense, said Ed Dillon, editor of the SNL Securities' monthly newsletter Bank Mergers and Acquisitions.
``The thing to look at is what they can do on the cost side or to enhance their revenues,'' Dillon said.
To alleviate some of the job displacements in United Carolina's home town of Whiteville, N.C., Southern National said it will establish a telephone calling center there that will provide 200 to 250 new jobs.
The Southern National-United Carolina agreement still must be approved by shareholders of both companies and by banking regulators. The two companies said they expect to complete the transaction by next spring. by CNB