Alabama's major banks are likely acquisition targets when full interstate banking arrives, but these prospects are not reflected in their stock prices.
"The Alabama banks don't carry takeover premiums in contrast to some other Southeastern banks," said Kathryn H. Bissette of Sterne, Agee & Leach Inc., Birmingham.
"But we think they will be part of the consolidation process nationally and that one or two of the Alabama banks will be acquired over the next couple of years," she said Wednesday.
Shares of Amsouth Bancorp. and SouthTrust Corp., the state's two largest banking companies, currently trade moderately at 1.4 and 1.5 times their respective book values.
Both the banks, which are based in Birmingham, also trade well under 10 times next year's expected earnings.
In late trading Wednesday, AmSouth was unchanged at $31.625 and SouthTrust was up 50 cents to $20.375.,
Together, the banks control over a third of the state's banking market. In fact, five banks control 70% of the state banking deposit market.
The other three are Compass Bancshares, Birmingham, formerly Central Bancshares of the South; Regions Financial Corp., Montgomery, formerly First Alabama Bancshares; and Colonial BancGroup, Montgomery.
"All of them enjoy high profitability ratios and grew steadily during the 1970's and 80's as the state's banking market consolidated," said Francix X. Suozzo of S.G. Warburg & Co., Inc., New York.
"Surprisingly, the Alabama banks have remained independent throughout the dramatic Southeastern consolidation of the past 10 years," Mr. Suozzo said in a new report this week.
Ms. Bissette, who works in Atlanta, thinks the banks have not gotten more attention from either investors or acquirers because Alabama's economic growth has been steady, rather than spectacular
"It's a view by the market that Alabama is a good and stable, but boring market," she said. "It's just not Virginia, or Florida or Georgia, which are seen as being more exciting."
But areas within Alabama, such as Huntsville, with its hightechnology activities, are growing rapidly. And new industry is arriving, notably a MercedesBenz manufacturing plant that will employ 1,500 by 1997.
"The market may also have missed that these aren't plain vanilla Alabama banks anymore," she said. They have operations in Florida, Texas, Georgia, Tennessee and Louisiana.
Mr. Suozzo said in a report this week that from this point forward "the future independence of Alabama's banks is now in question."
The possible acquirers are Barnett Banks Inc., Jacksonville, Fla.; SunTrust Banks Inc., Atlanta; Wachovia Corp., Winston-Salem, N.C. and First Union Corp. and NationsBank Corp., both of Charlotte, N.C.
He said his merger models indicate "that an acquisition of any of the Alabama banks is feasible at a 30% premium to the current market price."
Takeover in Pittsburgh?
Shares in Integra Financial Corp. soared $1.375 to $48.25, Tuesday, in action attributed to takeover speculation.
Although no specific acquirer is being named, James M. Schutz of Chicago Corp. said acquiring Integra represents the best way to enter the highly concentrated Pittburgh market, where it ranks behind PNC Corp. and Mellon Bank Corp. in share.
At yesterday's price the stock was trading below ten times Mr. Schutz 1994 earning estimate or at about 1.6 times book.