SunTrust Banks Inc.'s acquisition of a community bank in Alabama does not signal plans for further expansion into that state, the company says.
SunTrust reached a definitive agreement Wednesday to buy First United Bancorp, the parent company of First National Bank of Florence, which has $370 million in assets.
Florence is located in the northwestern corner of Alabama, close to the Tennessee border. SunTrust said it plans to incorporate First National into its Nashville-based bank, Third National Corp.
"It's an extension of one of [Third National's] natural markets . That's all it is," said John W. Spiegel, SunTrust's chief financial officer.
SunTrust, which is headquartered in Atlanta, has long been rumored to be a likely acquirer of AmSouth Bancorp., Birmingham.
However, the First United purchase will probably dampen that speculation.
$48 Million Deal
"If you were planning to buy a large bank soon, why would you go out and buy a small bank?" asked Kathryn Bissette, banking analyst with Sterne, Agee & Leach Inc., and Atlanta-based brokerage firm.
SunTrust plans to purchase First United in a stock swap valued at $48 million, representing 1.5 times First United's book value.
The agreement is subject to approval by First United shareholders and regulatory authorities.
The First United purchase marks the second small acquisition SunTrust has negotiated in the past two months.
In August, SunTrust agreed to buy HomeTrust Bank of Georgia, Gainsville, which has $310 million in assets.
"We have looked and continue to look at a myriad of [acquisition] opportunities that flow through here. We may actually look at two or three a week.
"It just means a couple of them turned out to work in terms of matching up our level of interest and their level of interest," Mr. Spiegel said.