ATLANTA -- First Alabama Bancshares Inc. won a bidding battle to buy Secor Bank, Alabama's largest thrift, for about $139.4 million, or 123% of estimated book value.
The Birmingham-based bank company, which has $7.9 billion in assets, said late Tuesday that it would purchase the $2 billion-asset thrift with a combination of stock to Secor shareholders and cash to the Federal Deposit Insurance Corp.
To Close by Yearend
The government has warrants equal to 25% of Secor's shares.
The in-market deal, expected to close by yearend, would boost First Alabama's earnings by 3% to 5% in 1994 and add about $1 to its book value of $18.09 a share, said Robert P. Houston, the bank's comptroller.
In late trading Wednesday, Secor's stock soared $1.375 to $18.25 a share. First Alabama fell $1 to $31.875 a share. The proposed exchange ratio valued Secor at $22.09 a share.
A bidding war for the recovering thrift was launched on May 7, when Secor announced an unsolicited offer -- though the thrift did not identify the prospective acquirer. Informed sources said the bidder was Amsouth Bancorp., also based in Birmingham, which bought five Secor branches last year.
Drumming Up Bids
But Victor E. Nichol Jr., Secor's president and chief executive and a former senior credit officer at Amsouth, was not on the best of terms with his former employer, several sources said. As a result, he is believed to have solicited other bids.
"We were involved in the process," an Amsouth spokesman said Wednesday. "But the price was a little higher than we were willing to offer."
Analysts said the thrift negotiated wisely.
Secor's management did a good job getting an excellent price for the company, considering their past problems," said Peter Tuz, an analyst at Morgan Keegan Inc. "It's probably an acquisition First Alabama could have done without."
Mr. Houston said the bank anticipates "significant" cost savings from the merger. The two companies have 188 branches in Alabama, some of which overlap. First Alabama said it will merge some back-office operations and mortgage businesses.
Secor is on the rebound after years of credit problems. Though it ended the first quarter with $29.5 million of nonperforming assets and a loan-loss allowance of $12.3 million, profits surged with help from the mortgage refinancing boom.
Secor earned $6.2 million in 1992, up from $5 million in 199 1. In the first quarter, it netted $2.3 million, for a 0.45% return on assets -- up from 0.27% for all of 1992.The Deal at a GlancePrice $139.4 million(*)Premiumover book 23%Secor Bank'sassets $2.0 billionSecor Bank's 45offices .26 in Alabama .15 in Louisiana . 4 in FloridaFirst Alabamaassets $10.2 billion(**)First Alabamabranches 260(**)(*) Indicated value, based on May 17 closing price of First Alabama at $33 a share(**) With pending acquisitions