BB&T enters Virginia with $111 million deal.

BB&T Financial Corp. made its first entry into Virginia Friday by agreeing to acquire Virginia Beach-based Commerce Bank for $111 million in stock, or 2.37 times book value.

BB&T will exchange 1.305 share of its stock for each of Commerce's 2.7 million shares outstanding. Based on BB&T's closing price Thursday of $31.25 a share, the transaction is worth $40.78 a share.

Executing a Strategy

"This acquisition is the first step in our long-term strategy for expanding throughout Virginia, as we have in the Carolinas," said BB&T chairman and chief executive John A. Allison in an interview.

Commerce Bank, which has $694 million of assets and 21 offices, reported first-quarter return on assets of 1.05% and return on equity of 15.25%.

BB&T, based in Wilson, N.C., has $9.24 billion of assets. It is the third North Carolina-based bank to enter Virginia. The two largest, NationsBank Corp. and First Union Corp., both based in Charlotte, have already established major franchises in the state.

Mr. Allison indicated that the Virginia Legislature's recent decision to open the state to reciprocal national interstate banking by July I had encouraged BB&T to make its move now.

"Commerce Bank was aware of that issue from their side - that they may be approached by somebody they didn't want to do a deal with," he said. "And from our perspective, obviously, we were aware Commerce might be approached."

Mr. Allison said he and Commerce CEO G. Robert Aston Jr. have been longtime friends.

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