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JEFF HARRINGTONThe joining of Regions Financial and Union Planters won't create a new giant but could alter this area's dynamic.
Regions Financial Corp. and Union Planters Corp., two second-tier Southeastern banks with a complementary presence in Florida, have agreed to a deal to create the nation's 12th largest bank holding company.
Regions is paying about $6-billion in stock for Union Planters. It's a much smaller echo of two recent deals that represented a resurgence in U.S. banking mergers. Bank of America recently agreed to buy FleetBoston Financial for $47-billion and J.P. Morgan Chase is buying Bank One Corp. for about $60-billion.
The combined Regions Financial Bank would have about $81-billion in assets, $56-billion in deposits, 5.1-million customers and 1,400 branches stretching from Florida to Iowa. It would jump into the Top 10 in Florida, neck-and-neck with AmSouth as sixth largest bank in the state with $6.7-billion in deposits, or roughly 2.5 percent of the market.
"The combination of our two companies will create a new regional force in the banking and financial services industry and further our respective strategic objectives," said Carl E. Jones Jr., chairman, president and chief executive of Regions.
Jones, 63, will run the operation initially, succeeded in a year as CEO by Union Planters' chief Jackson Moore, 55.
The two banks deemed the deal a merger of equals, agreeing to split the 26 board seats. But in addition to taking the Regions name, it will be based in Regions' headquarters in Birmingham, Ala. The Morgan Keegan brokerage and combined mortgage business will be run out of Union Planters' current headquarters in Memphis, Tenn.
Regions had assets of $48.6-billion at the end of 2003, while Union Planters had $31.9-billion.
"Regions is the larger and slightly better company, but the deal is structured to be as fair as possible to both sides," said Michael Plodwick, managing director and senior bank analyst at Blaylock and Partners in New York.
Both Regions and Union Planters have struggled through a slow-growth period, with profits rising less than 10 percent last year despite a surge in mortgage refinancing. Both banks also have been stuck in the middle tier without particularly strong shares of any market.
Plodwick said the new company, with a much stronger footprint, could become a takeover candidate. It will be the No. 1 bank in Alabama, Arkansas, Georgia, Louisiana, Mississippi and Tennessee.
In Florida, the bank will still be in the shadow of larger banks such as Bank of America, Wachovia and SunTrust. Yet the merger is expected to go smoothly in the state because there is little overlap of the two banks.
Regions operates its Florida headquarters in Tampa, with 13 of its 70 Florida branches in the Tampa Bay area. Union Planters has no branches in the bay area. It is centered in South Florida with 70 branches and is particularly strong in Miami.
"The only place we have some overlap is Palm Beach and Broward County and those two complement each other well so there will be no consolidation," said Pete Miller, who oversees Florida and much of four other states as Region's east regional president.
In fact, Miller said, Region intends to add at least 10 more branches in Florida over the next year, at least a few of them in the bay area.
Bay area customers will likely notice few changes, if any, at their Region branches. Adolfo Henriques, group CEO overseeing Union Planters' branches in Florida, Texas and Louisiana, said customers will benefit from a strong bank offering more products and services and more ATMs.
Ken Thomas, a Miami banking analyst and critic of past banking mergers by out-of-state giants, said the latest deal changes the Florida dynamic. For one, he said, it raises the likelihood of consolidation among the remaining Alabama banks scattered through Florida, including SouthTrust and AmSouth.
Under terms of the deal, each share of Union Planters common stock will be converted to one share of the new company. Each share of Regions common stock will be converted to 1.2346 shares of the new company's common stock.
That would give Union Planters shareholders a 41 percent stake in the new company and value their 192-million shares at about $6-billion at Thursday's closing price.
In trading on the New York Stock Exchange, Union Planters was up $1.31 a share to close at $32.67. Regions Financial rose $2 to close at $39.75.
- Information from Times wires was used in this report. Jeff Harrington can be reached at harrington@sptimes.com or 813 226-3407.