First Commerce Pays 2.6 Times Book For a Strong Bank in North Louisiana

First Commerce Corp. has bought the second-largest independent bank left in Louisiana for an eye-popping 2.6 times book value.

The price reflects both the quality of the acquired bank and the rapid consolidation of the state's banking market.

First Commerce, which is based in New Orleans, said Tuesday that it had signed a definitive agreement to buy Central Corporation of Monroe for $191 million in stock.

Central Corporation is the holding company for Central Bank of Monroe, which has $834 million of assets and a dominant market share in Monroe, a city in northeastern Louisiana.

Central Bank holds 38% of the deposits in Monroe. No. 2 in the market is Baton Rouge-based Premier Bancorp, with a 16% share.

Sixteen of Central Bank's 25 branches are in Monroe, four in Ruston, four in Alexandria, and one in Bastrop. Nine of the 25 offices are in supermarkets.

"Central Bank's strong market position in north Louisiana means that First Commerce will be able to compete effectively in this region of the state," said Ian Arnof, First Commerce's president and CEO.

First Commerce declined to estimate cost savings from the transaction, which is to close in the fourth quarter. Spokesman Michael A. Flick said most savings would come from back-office consolidation, since First Commerce and Central Bank branches overlap only in Alexandria.

Mr. Flick said First Commerce, which has $6.9 billion of assets, expects "less than 2%" dilution of its 1996 earnings.

"It's not enough to scream about," said Peter Tuz, an analyst at Morgan Keegan Inc., Memphis.

Mr. Tuz said he expects to reduce his 1996 earnings estimate on First Commerce - $3.35 a share - by five or six cents. The First Call consensus estimate is currently $3.46 a share.

"Central Bank is really worth whatever you can afford to pay for it without incurring too much dilution in the coming year's earnings," Mr. Tuz said, noting the rapid disappearance of Louisiana's independent banks.

"The opportunities to get an $800 million bank with commanding market share in any market in Louisiana are few and far between," he said.

Central Bank is also a good performer. It earned 1.35% on assets and 16.01% on equity last year, and it reported a ratio of nonperforming assets to total loans of only 0.38%.

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