In a deal that would give it a foothold in Atlanta, one of the largest and fastest-growing metropolitan areas in the Southeast, BB&T Corp. said Wednesday it has agreed to buy First Citizens Corp. of Newnan, Ga., for $126 million in stock.
The merger pact, which values First Citizens at 2.9 times its book value, would also take BBT into Georgia for the first time. BBT is based in Winston-Salem, N.C.
First Citizens operates 14 offices in the southern Atlanta metropolitan area and owns mortgage banking and real estate development subsidiaries. It has $421 million of assets,.
David M. West, an analyst at Davenport & Co. of Richmond, Va., said the price it plans to pay is "not cheap, but reasonable, given the market BB&T is entering,"
The North Carolina company has $35 billion of assets.
"We have been interested in the Atlanta market for a number of years because of the very significant growth rate ... it's a natural extension of our franchise," said BB&T chairman and chief executive officer John Allison. "First Citizens Corp. is a quality institution that will give us a new presence in a major financial center."
Analysts said the deal, which is to close early in the third quarter, fits BB&T's strategy of making a modest acquisition in a new market, then building its presence through additional deals and de novo branching.
But some said BB&T probably would have preferred to buy a larger company.
"This deal provides them with no critical mass, at least initially," said Michael L. Mayo, managing director of bank research at Credit Suisse First Boston.
Buying market share in the Atlanta market is becoming increasingly difficult, Mr. West said. The banking scene is dominated by institutions that rank among the 20 largest in the nation: BankAmerica Corp., SunTrust Banks Inc., Wachovia Corp., and First Union Corp. Banks in the $500 million to $2 billion asset range are few and far between, Mr. West said.
"Pretty much all of the significant players in Atlanta have been acquired," Mr. West said. "This acquisition is a little smaller than usual, but First Citizens must have hit BB&T as an easily acquired, very digestible entity."
BB&T operates 534 offices in the Carolinas, Virginia, Maryland, and District of Columbia.
The transaction would be accounted for as a pooling of interests. First Citizens shareholders are to get $40.53 per share, based on BB&T's Monday closing price of $37.5625.