BB&T Corp. continued its shopping spree Thursday, announcing an agreement to buy Mason-Dixon Bancshares of Westminster, Md., for $257 million in stock.
The price for $1.1 billion-asset Mason-Dixon is equal to three times its book value. The deal would bring BB&T's Maryland assets to $2.4 billion.
Just a day earlier, the acquisitive, North Carolina-based BB&T said it would make its first purchase in Georgia-First Citizens Corp. of Newnan, for $126 million in stock.
Though it is rare for acquisitions to be announced in such rapid succession, analysts said BB&T's strong stock price makes this an opportune time to fulfill an expansionist agenda.
Shares of BB&T have been trading at nearly 20 times estimated 1999 earnings and four times book value.
"They're getting aggressive because the market has rewarded them with an attractive valuation," said David M. West, an analyst with Davenport & Co. in Richmond, Va. "Their currency is at a price level that makes potential sellers happy, and deals of this size won't be dilutive."
Observers also said BB&T prefers to keep local management and employees in place at acquired institutions.
"BB&T has become an acquirer of choice for community banks," said Lana Chan, an analyst with CIBC Oppenheimer in New York.
Burney S. Warren, the Winston-Salem, N.C. company's executive vice president in charge of mergers and acquisitions, said the timing of the latest agreements was coincidental. BB&T, which has $35 billion of assets, has averaged almost four acquisitions a year over the last decade, and simply secured two attractive deals at the same time, he said.
"We've been wanting to enter Georgia and this part of Maryland for some time," said Mr. Warren, whose sole responsibility is to pursue acquisitions. "Doing them at the same time makes it a little hectic, but it's not like we'll be doing this every week."
The Maryland deal, set to close in the third quarter, would provide BB&T with 23 branches, 12 consumer finance offices, and three mortgage offices in the central part of the state. BB&T entered Maryland last year with its purchase of $535 million-asset Franklin Bancorp.
Mason-Dixon is the parent company of Carroll County Bank and Trust Co., Bank of Maryland, and Rose Shanis Financial Services.
The deal, which would be accounted for as a pooling of interests, will provide Mason-Dixon shareholders with 1.3 BB&T shares for each Mason-Dixon share. At the Jan. 26 closing price of $38.44, the exchange translates into $49.97 a share for Mason-Dixon shareholders.
"Our stockholders will receive a superior value for their Mason-Dixon shares and will become owners in a top-ranked and highly regarded financial services company," said Mason-Dixon president and chief executive officer Thomas K. Ferguson.
BB&T is likely to keep up the pace of bank deals, Mr. Warren said.
"We would probably do several more acquisitions in 1999 if they fit with our strategy," Mr. Warren said.
Mr. West said several Maryland banks could become targets for BB&T this year. Topping the list is $4.8 billion-asset Provident Bankshares Corp. of Baltimore. The analyst said it would make a "great complement" given the previous acquisitions.