Two Tennessee Banks Merging to Form State’s Largest

Union Planters Corp. agreed Friday to acquire Leader Financial Corp. for $523 million in stock, a deal that would combine two Memphis-based financial institutions into the state’s largest bank.

The acquisition would extend a wave of consolidation in the banking industry and could be a prelude to further buyouts of Southeast banks, analysts said.

“The region is ripe for more of this type of in-market merger,” said John Coffey, an analyst with Robinson-Humphrey. “There is no stopping the consolidation of the banking industry.”

Union Planters, Tennessee’s second-biggest bank, and Leader, the state’s largest savings and loan, together would have almost $15 billion in assets, surpassing First Tennessee National Corp. as the state’s largest.

Leader’s stock gained $4.25 to close at $42.25 on Nasdaq; Union Planters stock dropped $2.25 to $29.25 on the New York Stock Exchange.

Under terms of the agreement, Union Planters will swap 1.525 shares, worth $48 a share based on the stock’s closing price Thursday, for each of Leader’s 9.89 million shares.

Union Planters has 404 branches, most in Tennessee and others in Mississippi, Arkansas, Alabama, Louisiana, Missouri and Kentucky. Leader has 23 branches.

Plans call for Union Planters to shutter 20 branches of the combined bank.

The acquisition is subject to shareholder and regulatory approval. The companies expect to complete the transaction by the end of the year.