SouthTrust Corp. announced Monday that it will buy Bay Bancshares in La Porte, Tex., for $56 million in cash.
The deal is expected to close during the first quarter.
Bay Bancshares, the holding company for $336 million-asset Bayshore National Bank, would be the eighth Texas banking company acquired by Birmingham, Ala.-based SouthTrust since June 1998, and the third in the sizzling Houston market. La Porte is a Houston suburb.
Twenty-eight Houston area banks have changed hands since 1998. Bayshore National Bank will be the 29th.
Last year Wallace D. Malone Jr., 63, SouthTrust's chairman and chief executive officer, said it wanted to reach $3 billion of assets in Texas by the end of 2000. With this deal, SouthTrust's assets in Texas would total roughly $2.9 billion, making it the state's 12th-largest banking company. Banc One is the biggest.
"SouthTrust continues to add to its capabilities in Texas, which is essential if it is going to pursue its strategy of expanding into high-growth markets in the Southeast and Southwest," said Eric Rothmann, an analyst at First Security Van Kasper in San Francisco.
Under the terms of the deal, Bayshore's 10 offices would convert to SouthTrust branches, but its employees and most of its management team - including president Albert D. Fields - would keep their jobs, said Jennifer Rush, a SouthTrust spokeswoman.
"SouthTrust is a great strategic match for our bank," said Mr. Fields, who is 49. "We believe this transaction will be well-received by our shareholders and our customers."
With assets totaling $44.3 billion, SouthTrust is ranked among the 30 largest bank and thrift holding companies in the country. It reported third-quarter earnings of $121.6 million. In the nine months that ended Sept. 30, SouthTrust earned $359.6 million.
Bay Bancshares, which was founded in 1965, reported third-quarter earnings of $875,000 and nine-month earnings of $2.4 million.
News of the deal provided a big boost to Bay's stock. It was up almost 19%, to $25.50 in afternoon trading Tuesday. SouthTrust's share price fell 2.4%, to $34.53.
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