First American Corp., Nashville, said it will move into second place in a fast-growing suburban market by buying First City Bancorp of Murfreesboro, Tenn.

The $51 million stock swap deal for $343 million-asset First City would also move First American into first place in market share in the Nashville metropolitan area.

"It's a nice fill-in for First American," said Kay Lister, a banking analyst with Keefe, Bruyette & Woods Inc. "The growth rate in Rutherford County is very strong."

The merger, announced last week, also brings First American 11 banking offices and nine consumer finance locations in the central part of the state. First American, which has $7.7 billion of assets, said it will use the new finance offices "to enhance the growth" of its consumer finance company.

With its 16% market share in Rutherford County, First City will boost First American's presence there to 22%, according to First American's chairman and chief executive, Dennis C. Bottorff.

Third National Bank, a subsidiary of SunTrust Banks, Atlanta, is the county's market-share leader, with 24%.

First American will pay about 2.2 times First City Bancorp's book value, but Ms. Lister pointed out that the price is not as high as it seems.

"First City has a unique capital structure, making the premiums look artificially high," she said. "There's a lot of preferred," an employee stock ownership plan, and a lot of convertible debt. "It's not just common equity."

With an efficiency ratio in the high 70s, it won't be hard for First American to take costs out of First City. First American said it expects to reduce operating expenses at the combined company by 25%, or $2.5 million. The bank said it will close two branches, but it is unclear which offices will be closed and how many people will be laid off as a result of the merger.

The deal, which is expected to be completed during the first quarter of 1996, is subject to approval by regulatory authorities and First City's shareholders. It will be antidilutive to First American's earnings in the first full calendar year following integration, the bank said.

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