John Mason seldon recommends investments in potential merger targets, but the bank analyst at Interstate Johnson Lane finds it hard to resist a likely play on First Florida Banks Inc.

With Southeast Banking Corp. sold to First Union Corp., and C&S/Sovran being merged with NCNB Corp. to become NationsBank, Tampa-based First Florida is the only likely target left in a state dominated by four growth-oriented banks, Mr. Mason said.

"I don't go around collecting takover targets, but this is like going into a singles bar and finding there are four girls -- and you."

Acquirers More Appealing

Mr. Mason argued that the consolidation of the industry should be the driving force behind a bank investment strategy. He generally recommends the acquirer rather than the target, though.

That is because the fundamental value of a healthy acquirer will support the stock price, whether or not the merger deal pans out.

Mr. Mason also focuses on potential consolidation in high-growth states such as Florida and Arizona, where he says Valley National Corp. resembles First Florida. Both have branch systems in a growing region and both are virtually alone as takeover candidates in their respective marketplaces.

A strong deposit base will be sought by smart regional bankers who hope to flourish in the future, Mr. Mason said. In Florida, Barnett Banks Inc. dominates the retail market, with about 24% of bank deposits, he said.

It is followed by First Union/Southeast, with 20%. NationsBank will control about 15.5% and, SunBank, 12.8%. First Florida is next, but relatively tiny, with 4.5% of the state's deposits, Mr. Mason noted.

An 'Excellent' Bet

The chances that one of the others will try to strengthen its franchise by making a bid for First Florida and its strong presence in Tampa, are now excellent, Mr. Mason said.

First Florida shares are currently trading at a mere 73% of book value, a ratio that is attractive to most investors.

Mr. Mason anticipates that losses due to provisions for real estate problems will be worse than expected, a $2 a share loss for the quarter and $2.80 a share for the year. But that should do little to weaken the stock price.

Samuel J. Beebe, an analyst with Williams Securities, agreed that First Florida is an attractive target, but questioned whether investors can make a quick killing. First Florida shareholders may resist an acquisition for now, he said.

Big Investors May Balk

The Lykes family, known for its sausage and steamship businesses, owns about half the stock, Mr. Beebe noted.

"They are astute business people, and they are not going to entertain giving [the bank] away as a temporarily distressed property."

A more likely scenario, Mr. Beebe said, would be a sale in 1993, when the bank will have put its real estate problems behind it and can command a better price.

And by that time, who knows? The Lykes may decide banking is an attractive business to be in, he suggested.

Although First Florida is the last significant bank available in the state, Mr. Beebe added, some may opt to acquire thrifts.

Fortune Financial Corp., for example, has a wider branch network along the west coast than First Florida, and it is being converted to a bank charter.

Bank issues were mixed in thin trading on Wednesday. J.P. Morgan & Co., among the most active, rose 75 cents to $60.625 by late afternoon.

Morgan may have benefited from a news story by Reuters that said analysts expected weak earnings by banks, except those that emphasize trading operations, as Morgan does.

The other major bank that fits that category, Bankers Trust New York Corp., fell 12.5 cents to $60.125, however.

Transactions by Midlantic Corp. with Comerica Inc. and Mellon Bank spurred moderate trading of all three issues.

Mellon, which acquired Midlantic's United Penn Bank, gained $1.125 to $34.25. Comerica added $1.375 to $44.25 on news that it acquired Midlantic's Florida trust unit. Midlantic rose 12.5 cents to $6.25.

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