North Carolina-based Southern National Corp. announced on Monday that it had agreed to buy FedFirst Bancshares Inc., Winston-Salem, for about $84 million in stock.
The deal, the latest in a series of bank acquisitions of southeastern thrifts in recent weeks, will build Southern National's deposit market share in Winston-Salem to 19% from 7% and improve the company's ranking to second place from sixth. FedFirst is the parent company of First Federal Savings Bank.
Southern National, with $4.4 billion in assets, is said to be thinking about moving its headquarters to Winston-Salem from Lumberton, a city in southeastern North Carolina.
Expanding the Deposit Base
After the FedFirst transaction is completed, Southern National will have 32% of its deposits based in the northwestern part of the state, where Winston-Salem is located.
Spokesman Bob Denham confirmed that Winston-Salem, among other cities, has been courting Southern National.
Based on Southern National's Monday morning trading price of $15.25 a share, the deal is worth $38 a share to FedFirst stockholders.
FedFirst stock was trading at $33.50, up $4.50 a share, after the deal was announced; the company went public in March 1991 at $10 a share. Southern National was down 87.5 cents.
Pricier than Other Deals
Southern National will pay an estimated 1.4 times FedFirst's book value, one of the higher prices seen in recent thrift deals. The company said it expects the purchase to be "slightly dilutive" to its 1993 earnings.
First Union Corp., Charlotte, has agreed to pay about 1.1 times book for DFSoutheastern Inc., Decatur, Ga. AmSouth Bancorp., Birmingham, said last week it would pay about 1.2 times book for Chattanooga Fianancial Corp. in Tennessee.
First Federal has $400 million in assets and 10 offices. Last year, Barron's rated it among the nation's 12 best thrifts.
In the first quarter, it earned $1 million, which represented a return on average assets of 1.10% and return on average equity of 7.40%.