BB&T to acquire area Bancshares for 1.80 times revenue

Weekly Corporate Growth Report, Nov 19, 2001

The Deal: BB&T Corp. has agreed to purchase Area Bancshares Corp. for $450.6 million in stock. After news of the acquisition was announced, shares of Area Bancshares gained $1.08 to $18.28, while BB&T shares lost seven cents to close at $33.94.

Discussion: Area Bancshares is the holding company for Area Bank, which operates some 75 branches across Kentucky. The bank offers such services as checking, savings, money market accounts and CDs. Commercial loans make up more than 40 percent its loan portfolio; real estate mortgages, which are sometimes sold into the secondary market with servicing retained, account for more than 35 percent. The bank also provides insurance, trust and brokerage services. One of the largest banks based in Kentucky, Area Bank was formed after Area Bancshares consolidated its 17 subsidiary bank charters.

BB&T has more than 900 banking branches in the Carolinas, Georgia, Kentucky, Maryland, Tennessee, Virginia, West Virginia and Washington, DC. Its largest subsidiary, Branch Banking and Trust, is one of North Carolina's oldest banks. BB&T writes real estate, consumer, and commercial loans funded primarily by savings accounts, CDs and IRAs. Subsidiary Scott & Stringfellow is a full-service brokerage, while Regional Acceptance provides used car loans. Other units offer insurance, lease financing and management and employee benefits consulting.