In a move that is likely to quadruple its assets in Georgia, Alabama- based Regions Financial Corp. said Monday that it would acquire First National Bancorp of Gainesville for $647 million in stock.

The price equals 2.13 times First National's book value.

Most of First National's $3.1 billion of assets and 20 subsidiary banks are in northern Georgia outside Atlanta. The company also has a minor presence in Florida.

"The northern part of Georgia is truly an interesting and exciting market to operate in," said Regions chairman and CEO J. Stanley Mackin.

Mr. Mackin added that Regions, an active acquirer, "is not interested in growth for the sake of growth. This is a quality addition that brings, I think, exquisite stockholder value."

Regions' shares rose/fell tk on the news, while First National was up tk to tk.

Birmingham-based Regions, with $13.8 billion of assets, will have $1 billion of Georgia assets once several pending acquisitions are consummated, not including the First National transaction. Regions has been an active acquirer of community banks in both northern Georgia and metro Atlanta, but the First National transaction dwarfs all the others.

Regions said the deal, valued at 15 times next year's estimated earnings, would dampen earnings somewhat in 1996 but would bolster them thereafter.

"From a financial standpoint, the deal is neutral to Regions," said analyst Thomas F. Theurkauf Jr. with Keefe, Bruyette & Woods Inc. "The strategic opportunity is a real one."

Mr. Theurkauf pointed out that First National operates in several counties close to metro Atlanta that enjoy very high growth rates.

During a Monday conference call, Regions executive financial officer Richard D. Horsley drove home the point that the deal depends heavily on cost savings in order to diminish dilution for Regions' own shareholders.

Expanding on an existing cost-reduction program at First National, plans call for reducing the acquired bank's annual noninterest expense by one- fourth, or $23 million.

Mr. Horsley said most of the reductions would come from compressing First National's decentralized, 20-bank subsidiary network into Regions' soon-to-be-organized one-bank Georgia holding company.

First National had long been considered a likely takeover candidate, in part because of its high overhead costs. The company's efficiency ratio is currently 63.9%, compared with Regions' 56.2%

Another factor was a leadership void. Richard A. McNeece, First National's chairman and CEO, had resigned in April following a dispute with the board.

First National had said it expected to hire a replacement for Mr. McNeece by September, but the lack of an announcement fueled continuing takeover speculation that sent the stock sharply higher in the third quarter.

First National had been run on an interim basis by Peter D. Miller, its president and chief administrative and financial officer. Mr. Miller said the bank's board "is proactively in support of this merger."

Mr. Miller declined to say whether First National or Morgan Stanley, its investment banker, had received competing offers for the company. But a source close to the situation said Morgan Stanley sounded out all potential acquirers, including SunTrust Banks Inc., NationsBank Corp., Wachovia Corp., First Union Corp., and even Ohio's Banc One Corp.

"Regions offered the best pricing level," the source said.

Mr. Miller said he began conversations with Regions several months ago. Final details of the deal were negotiated over the weekend, when Regions did its preliminary due diligence.

Mr. Horsley said Regions would take a one-time restructuring charge to cover the transaction, which is expected to close in April. He declined to estimate the size of the charge.

Mr. Horsley did estimate Regions' 1996 dilution at between 2% and 3%, excluding the restructuring charge.

Of the $23 million in planned cost savings, Mr. Horsley said $17 million would come in 1996, with the rest in 1997. He said Regions did not expect to adjust its loan-loss reserve ratios to accomodate First National's balance sheet.

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