After eyeing Tennessee for months, BB&T Corp. has finally made its move.
The Winston-Salem, N.C., company announced Wednesday that it plans to buy BankFirst Corp. of Knoxville in a stock swap valued at $149.7 million. In acquiring $848 million-asset BankFirst, BB&T would enter the state as its 11th-largest bank company, with 32 branches. Scott Reed, BB&T's chief financial officer, said the company had been looking to expand in Tennessee and was particularly attracted to the Knoxville market. Eastern Tennessee is growing fast, especially along the I-75 and I-81 corridors, where new technology companies continue to sprout up, Mr. Reed said.
BB&T's own growth has been torrid in the Southeast. The company has recently completed two deals in Georgia and one in West Virginia and announced last month that it would buy FCNB Corp. of Frederick, Md., for $227 million.
Not including pending deals, BB&T, with assets of $55.2 billion, operates 825 branches in the Carolinas, Virginia, Maryland, Georgia, West Virginia, Kentucky, and Washington.
"If you look at the market that we serve, there is a little gap, particularly in eastern Tennessee," Mr. Reed said. "And this nicely blends in with our other market."
The announcement of the deal also came just weeks after First Union Corp. announced it was selling all of its 90 Tennessee branches to Milwaukee-based Firstar Corp.
Analyst Christopher Marinac of Robinson-Humphrey Co. said the timing of the two deals was a mere coincidence, though he questioned why First Union was so eager to leave the state.
"I agree with the BB&Ts and Firststars of the world that Tennessee is the right place to be for banking," Mr. Marinac said.
He added that the deal would benefit customers of BankFirst, whose current offering of services he called "slim" compared with BB&T's.
Fred R. Lawson, BankFirst's president and chief operating officers, agreed that BankFirst, which operates two banking subsidiaries, agreed that services would expand. BankFirst has tripled is assets since 1992 and Mr. Lawson said that the increasing customer base requires more options of products and services.
BB&T has "the resources to do so much," Mr. Lawson said. "I am really thrilled and really have confidence in their management."
BankFirst shareholders would receive 0.455 shares of BB&T stock for each of their own. At BB&T's closing price Tuesday of $26.21, that would be $12.21 per BankFirst share, or 1.77 times book value.
BankFirst stock was up 3.4% in heavy trading Wednesday, closing at $11.50. BB&T's stock closed down slightly to 26.375.
The 32 BankFirst branches would assume the BB&T name and be run by a new, Knoxville-based community bank division.
Like its 20 other banking regions in eight states and the District of Columbia, the Tennessee division would operate as an autonomous community bank, with its own president and all lending decisions made locally. A regional president has not been named.
Mr. Reed said that BB&T has no immediate plans to build new branches in eastern Tennessee, but he added that it would acquire two branches in Blount County and one in Monroe County that are under construction by BankFirst.
The sale is expected to close in the first quarter of 2001.
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