NationsBank Corp. on Friday filed for permission to issue $2.5 billion in debt securities and preferred stock, signaling that its ambitious acquisition program is far from over.

While banking companies generally pay for acquisitions in stock, analysts speculated that a number of banks, including First American Bankshares' Washington operations, may soon become available for cash purchase.

|In Acquisition Mode'

"Clearly, this company is in more of an acquisition mode than many other banks," said Judah Kraushaar of Merrill Lynch & Co. "NationsBank wants to be in a position to move quickly with financing if an acquisition opportunity arises."

"They changed their name to NationsBank for a reason," said Diane Glossman of Salomon Brothers Inc.

Separately, NationsBank announced late Friday an agreement to sell Amresco, an asset-management unit, to CGW Southeast Partners of Atlanta for book value plus performance-based considerations.

Amresco manages $10 billion in assets for the government and private sector.

The shelf filing with the Securities and Exchange Commission came three days after NationsBank agreed to buy about $2 billion in consumer assets from Chrysler First Inc., a finance unit of Chrysler Corp.

But John Mack, treasurer, said the filing was not related to that purchase. "We wanted to have more capacity to issue," he said, adding that the company does not plan to sell debt or preferred before yearend but will keep its options open.

NationsBank has said it will buy the Chrysler First assets for about $2.1 to $2.2 billion in cash, including a premium of about $100 million.

To fund the purchase, the company will likely issue about $1 billion in commercial paper, medium-term notes, and other debt, Mr. Mack said. In addition, $500 million to $600 million in cash at the holding company could be used. The balance of funds would come from NationsBank subsidiaries that may choose to hold the Chrysler assets, he said.

Strong Capital Position

Generally, the Federal Reserve frowns on cash acquisitions that are not accompanied by capital-raising efforts. However, NationsBank has strong capital ratios and no immediate need to raise capital, said Nancy Bush, banking analyst at Brown Brothers Harriman & Co.

At Sept. 30, NationsBank had 7.54% Tier 1, 11.68% total, and 6.20% leverage capital ratios, well above regulatory requirements. The company may need to increase its 5.59% tangible capital ratio, Ms. Bush said, but "they can do it internally through earnings."

Ms. Bush said she does not think management is planning a binge of poorly conceived acquisitions.

She said NationsBank's deal with Chrysler First, its stakeout in MNC Financial, and the proposed brokerage partnership with Dean Witter Financial Services show that management's acquisition strategy includes keeping costs under control. It is unlikely to blitz the capital markets with securities issues to pay for growth, she added.

Besides a possible bid for First American assets, according to Tony Davis, banking analyst at Wheat First Securities, NationsBank may tap the market under Friday's filing to raise cash to complete the purchase on MNC Financial Inc. before next October, when the price will go up under the stakeout agreement.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.