AmSouth Bancorp.'s chairman and chief executive, John W. Woods, appeared to dampen takeover speculation about his company Tuesday by saying he is interested in expanding into adjacent states.

Speaking to analysts in New York about AmSouth's plan to acquire a Tennessee thrift, Mr. Woods said his Birmingham, Ala.-based bank would consider further acquisitions in Florida, Georgia, Mississippi, and Tennessee.

In response to a question about recurring speculation that AmSouth could be a takeover target, Mr. Woods said, "So far, nobody's come along with any interest in paying what they'd have to pay to get us interested.

"We've always had the same position that we think we can do a pretty job for our shareholders, as we have in the past, by continuing to be headquartered in the mid-South," he added.

Tennessee Thrift Deal

AmSouth announced late Monday it would buy First Chattanooga Financial Corp., which has $1 billion in assets, for about $104 million, or 1.2 times the thrift's book value.

AmSouth agreed to exchange 1.26 of its shares plus $1 in cash for each shares of first Chattanooga.

AmSouth's shares fell $1 to $28.75 in afternoon trading; First Chattanooga's share price rose $9 to $33.

Based on AmSouth's trading price Tuesday afternoon. First Chattanooga holders would receive about $37.23 in cash and stock for each share.

Talk Quiets Down

AmSouth, with $9.2 billion in assets, has often been touted by stock analysts as a potential merger partner for one of the southern superregionals, such as Sun Trust Banks Inc., Atlanta; Wachovia Corp., Winston-Salem, N.C., and NationsBank Corp., Charlotte, N. C.

Such talk died down on news that AmSouth had struck a deal for First Chattanooga, which is the largest mortgage originator in Chattanooga and second in deposit share.

The acquisition "gives them a good presence in Chattanooga," said Peter Tuz, banking analyst with Morgan Keegan in Memphis.

He termed the deal "slightly more negative than positive" for AmSouth because it dispelled some of the takeover premium built into the stock's price.

During the analyst's presentation Tuesday, AmSouth officials reaffirmed that shareholders would suffer no dilution from the deal. They estimated they could cut First Chattanooga's expenses by $2 million a year, mostly in operations.

Georgia on the Mind

One intriguing feature of the deal is it gives AmSouth a foothold in north Georgia through a First Chattanooga branch. Mr. Woods said AmSouth planned to convert the branch into stand-alone Georgia bank as a prelude to further expansion in that area of the state.

Mr. Woods also said AmSouth continues to be interested in thrifts and thrift assets sold by the Resolution Trust Corp. AmSouth entered Nashville last year by acquiring an insolvent S&L from the RTC.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.