The South is the latest Klondike for investors panning for takeover gold in bank stocks.
Since NationsBank Corp. agreed to buy Florida's Barnett Banks Inc., shares of the four largest Alabama banks-Amsouth Bancorp., Southtrust Corp., Regions Financial Corp., and Compass Bancshares - have jumped. Banks in Louisiana, Mississippi, and Tennessee also have tallied substantial gains.
"It's takeover mania," said John B. Moore, bank analyst at Morgan Keegan & Co., Memphis.
For now, investor speculation seems focused mostly on Amsouth. The Birmingham bank's shares have risen 11%, to $46.69 from $42.06, since the NationsBank/Barnett deal was announced on Aug. 29.
Shares of Regions are up 7.7% and those of SouthTrust have risen 7.5%. The stock price of Union Planters Corp., based in Memphis, is ahead 7.7%. and Trustmark Corp., Jackson, Miss., is up 5.1%. Meanwhile, the Standard & Poor's bank index has risen 3.1%.
Although these banks may not sell soon-none is said to be close to doing so right now-chances are good that most eventually will be sold, analysts say.
About 80% of the nation's top 50 banking companies are "susceptible" to takeovers, Natwest Securities bank analyst Thomas McCandless wrote in a recent report.
Some investment bankers said takeovers at high premiums will not be a given. Although the Alabama banks have commanding market shares, the market itself is not growing rapidly. Southern banks with significant market share outside their home bases are viewed as the most desirable.
Amsouth has developed a network of 116 branches in Florida, making it the sixth-biggest bank in the state, according to SNL Securities. SouthTrust has 165 Florida branches, but ranks just behind Amsouth in market share of deposits. Compass has 30% of its assets in Texas, said Keefe, Bruyette & Woods analyst R. Harold Schroeder.
Analysts say these banks offer a company based outside the state-such as First Union Corp. or Banc One Corp.-the chance to quickly build business in attractive southern markets.
"None of these banks are hemmed in by their home markets, which are pretty good by themselves," Mr. Schroeder said.
Some investors say the market is putting too much emphasis on the takeover possibilities.
"It's getting ludicrous," Thomas Lefebvre, portfolio manager at Duff & Phelps, Chicago, said of the takeover speculation fueling a rise in share prices. "None of the (southern) banks have the same franchise as Barnett. And people seem to forget that Barnett put itself up for sale because (chief executive Charles) Rice was running into succession issues."
Nevertheless, in the stampede to buy below a bank's imagined takeout price, fewer investors are asking questions about executive succession, technology costs, or earnings growth limits, he said.
