In two days last week, First American Corp., Nashville, agreed to two acquisitions that would extend its reach through central and southeast Tennessee, and move it for the first time into Georgia.

In the largest of the two deals, First American would pay $297 million in stock, or 2.88 times book, for Pioneer Bancshares, a $990 million-asset bank holding company headquartered in Chattanooga.

Pioneer has two banking subsidiaries and a thrift unit, and it operates 34 banking offices, including one in northwest Georgia.

"We're strengthening the banking franchise of the company in the primary markets we serve," said Dennis C. Bottorff, First American chairman. "When we close all the things that are pending, we'll be tied for No. 1 in statewide market share."

First Tennessee National Corp., Memphis, is currently the top banking company in the state's deposit market, with a 14.35% share, according to Sheshunoff Information Services Inc.

In addition to the Pioneer transaction, First American said it would buy Middle Tennessee Bank, a $232 million-asset institution headquartered in Columbia, for $57 million.

Middle Tennessee has seven banking offices in the central part of the state. The deal would give First American the No. 2 market share in Maury County, which is home to a large Saturn auto factory and reports an economic growth rate three times the national average.

The two deals came after the May 1 closing of First American's purchase of Deposit Guaranty Corp., Jackson, Miss. That deal boosted the Tennessee company's asset size by 67%, to $18.2 billion.

Analysts said the price of the Pioneer deal appeared reasonable, considering the target bank's bloated expense base. Pioneer's ratio of expenses to revenues is more than 60%, above that of its peers. First American said it would cut 40% from Pioneer's expense base.

Moreover, Pioneer gives First American a much-strengthened position in Chattanooga, a major Tennessee market.

"That was the one hole they had," said Hope Willard, an analyst at J.C. Bradford & Co.

The Pioneer deal is expected to close in the fourth quarter. First American said it expects the acquisition to create $16 million in pretax charges.

The Middle Tennessee transaction is also expected to close by yearend and would add to 1999 earnings, First American said.

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