Union Planters Does It Again -2d Deal in Days

In its second deal in three days and its 12th since November, Union Planters Corp. said Wednesday that it had agreed to buy Ambanc Corp. of Vincennes, Ind., for $211 million in stock.

The pact would bring Union Planters into Indiana for the first time while adding to the network it is building in neighboring Illinois.

"This affiliation fits very well geographically with the banking franchises in Illinois and west Kentucky that are part of our pending acquisitions of Magna Group and Peoples First," said Union Planters chairman and chief executive officer Benjamin W. Rawlins Jr.

Memphis-based Union Planters agreed to buy $1.5 billion-asset Peoples First Corp. of Paducah, Ky., in November. An announcement with $7 billion- asset Magna Group Inc. of St. Louis followed in February.

On Monday, Union Planters said it had agreed to buy $1.5 billion of deposits and 24 branches in Florida from San Francisco-based California Federal Bank. That deal has a price tag of $110 million and came on top of two others in Florida, one still pending.

Ambanc, with $750 million of assets, has 17 branches in southern Indiana and nine in southeastern Illinois.

The Indiana-based holding company probably would not have caught the attention of Union Planters if it had not been for Magna, said Jack W. Parker, Union Planters executive vice president and chief financial officer.

"Without Magna, Ambanc wouldn't have fit anything we had, and we wouldn't have known the market," he said.

Ambanc does fit a mold Union Planters likes: community-oriented, with dominant local market share. Ambanc is the market leader in three of the eight counties it operates in, with 35% of deposits, Mr. Parker said.

"It mirrors so many of the community banks we have already bought," Mr. Parker said. "We are in a lot of rural areas, and these banks run very profitably."

Analysts said the purchase, though no bargain at 2.7 times Ambanc's book value, made sense for Union Planters.

"This is what Union Planters does well," said Christopher T. Kelley, an analyst at Morgan Keegen & Co. "They are better than most at identifying which costs to cut out."

Union Planters said it would wring 27% out of Ambanc's expense base, or $1.5 million, by the end of 1999, mostly from combining back-office operations.

No branches would be closed, and the fate of Ambanc's 309 full-time employees has not yet been decided, Mr. Parker said.

Even as it bulks up through a rapid-fire series of transactions, $18 billion-asset Union Planters is still widely regarded as takeover bait.

"I think they're going to keep expanding until someone gobbles them up," said John Wimsett, an analyst at Friedman, Billings, Ramsey & Co. "A $30 billion bank is much more attractive to a First Union or a NationsBank" than an $18 billion bank.

Union Planters has 561 branches in Tennessee, Missouri, Florida, Mississippi, Arkansas, Alabama, Louisiana, and Kentucky. Recently announced deals would extend the company into Illinois and Texas and expand its presence in rural parts of Alabama, Tennessee, Mississippi, and Kentucky.

Mr. Wimsett said there is risk of such a high-octane growth strategy coming to a bad end. "You have to question whether management can consolidate all of these deals. They are very spread out," he said.

Terms of the Ambanc deal provide for an exchange of 0.4841 share of Union Planters stock for each Ambanc share. The acquisition, like the one of Magna, is scheduled to close in the third quarter.

In February, Ambanc hired McDonald & Company Securities of Cleveland to explore a potential sale as its chief executive officer neared retirement.

Several companies lined up to bid, including CNB Bancshares and Old National Bancorp, both of Evansville, Ind., according to Troy Stoll, Ambanc's chief financial officer.

"We've been watching the merger environment heat up for quite a while now," Mr. Stoll said. "When you look at it from the shareholder's perspective, now was a good time."

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