NCNB, Sovran discuss merger If 2 boards approve, bank would become 2nd-largest in U.S.

June 27, 1991|By Knight Ridder

CHARLOTTE, N.C. -- Bennett Brown, chairman of the C&S/Sovran Corp., will discuss a possible merger with NCNB Corp. with his bank's board of directors today -- a merger that would create the nation's second-largest bank.

NCNB Corp. chairman Hugh McColl Jr., who proposed the merger earlier this week, met with his bank's directors yesterday.

Both companies confirm McColl and Brown met within the last few days, though results of meeting weren't disclosed.

News of the talks comes after weeks of speculation about a deal and amid reports the two sides are close to an agreement.

NCNB made an offer two years ago to buy what was then Citizens and Southern Corp., Atlanta. It was rebuffed.

But this time it's different.

McColl has admitted he was too aggressive two years ago when he tried to buy C&S. This time, McColl's overture was understated, absent the military bluster that offended C&S executives.

When McColl made that offer, he said he had no choice but to "launch my missiles."

But McColl's bank has held up well during the past year's recession, boosted by tax breaks and earnings from Texas.

And Brown, now chairman of C&S/Sovran, has been chastened by his bank's performance. It merged with Norfolk, Va.-based Sovran Financial Corp. in 1990 after fending off NCNB.

Sovran is burdened with bad real estate loans, two of its subsidiaries are under regulatory scrutiny and its stock is in the doldrums. As a result, many analysts suspect that C&S/Sovran may soon cut its 39-cent quarterly dividend.

Some C&S shareholders are angry Brown rejected NCNB the last time.

"I think NCNB has the upper hand here," said Moshe Orenbuch, a bank analyst with Sanford C. Bernstein & Co., who believes a deal is likely.

But there are obstacles, including questions about C&S/Sovran's health because of problems in the Washington real estate market.

"You can't dismiss" the possibility of a merger, said James McDermott, a bank analyst with Keefe Bruyette & Woods Inc., New York. "But whether something comes of it I would have to assign a low probability."

And there is another hurdle.

"I can't imagine those two sitting down and agreeing to anything," Frank Anderson, a bank analyst with Stephens Inc., Little Rock, Ark., said of McColl and Brown.

"The personalities don't seem compatible," said Frederick Meinke, of Raymond James & Associates Co. of St. Petersburg, Fla.

Neither McColl nor Brown could be yesterday for comment.

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