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Motorists line up at the drive-through lanes at Compass Bank's main office in Decatur on Friday afternoon. Compass is being acquired by a Spanish bank for $9.6 billion in cash and stock.
Daily photo by Gary Cosby Jr.
Motorists line up at the drive-through lanes at Compass Bank's main office in Decatur on Friday afternoon. Compass is being acquired by a Spanish bank for $9.6 billion in cash and stock.

Spanish bank buys Compass
No immediate impact seen
in Decatur operations

From staff, AP reports

Spain's second-largest bank announced Friday it will acquire Compass Bancshares, which has more than 400 Decatur employees, for $9.6 billion in cash and stock.

Most of Compass Bank's local employees work at its credit card processing facility on Beltline Road Southwest. A Compass spokesman said Friday that the acquisition will not affect the processing facility "at this time," but a banking expert predicted the buyer eventually will sell all of Compass' Alabama holdings.

The acquisition, by Banco Bilbao Vizcaya Argentaria S.A., strengthens the Spanish bank's foothold in Texas and other states with large Hispanic populations.

Compass spokesman Ed Bilek said the acquisition would have no immediate impact on Compass employees or customers. Unlike other recent mergers that resulted in consolidations within the local banking market, BBVA has no presence in Alabama.

"As part of the agreement, Compass Bank will lead the U.S. operations. Compass Bank will continue to be called Compass Bank," Bilek said. "Really there's no effect on customers or employees at this time. It's business as usual. We just have a larger partner that provides us some additional leverage, flexibility and scope."

Compass Bank's Decatur city president, Russell Graydon, referred all questions to Compass' corporate headquarters.

Compass has three Decatur branches with deposits totaling $195 million and two branches in Athens with combined deposits of $108 million. Its seven Madison County branches have $747 million in deposits.

The transaction consists of about $4.6 billion in cash and about 196 million shares of Banco Bilbao common stock.

Compass, which is based in Birmingham and has 415 banks from Arizona to Florida, including 162 in Texas, will become a subsidiary of Banco Bilbao, with Banco merging its U.S.-based banking affiliates with Compass.

The boards of both companies have already approved the deal, which is expected to close in the fourth quarter.

"This clearly presents a wonderful opportunity to solidify BBVA's presence in the fastest-growing geographies in the United States," Compass Chairman and CEO D. Paul Jones Jr. said in a conference call.

'Premier footstep'

"It gives BBVA a premier footprint in the U.S. and the Southwest in particular and the Sun Belt," he said.

Compass shareholders can choose to receive either 2.8 Banco Bilbao American depository shares or $71.82 in cash per Compass share.

The deal is a 16.3 percent premium over Compass' closing stock price of $61.78 Wednesday on the Nasdaq Stock Market. Compass shares rose $4.33, or 6.5 percent, to $70.70 when trading closed Friday on the Nasdaq.

Banking expert Benton Gup expects BBVA to move headquarters to Texas and sell the Alabama branches.

"They wanted a presence in the United States, particularly in the areas that serve Hispanics," said Gup, a finance professor at The University of Alabama. "They had already bought two banks in Texas, so the Compass acquisition gives them a significant share of the Texas market and New Mexico and the other states that Compass serves in the West."

Asked if BBVA would move Compass' headquarters, Jones said: "The transaction provides for the headquarters to remain in Birmingham." He declined to elaborate.

He said 43 percent of the total deposits will be in Texas branches and 29 percent in Alabama, where Compass has 89 full-service offices.

Banking analyst Bob Patten said Jones found a deal that is a good fit for both the employees and shareholders, particularly since the companies have little overlap in branches.

"He picked his buyer, because he had a great franchise with a great track record and a great outlook," said Patten, managing director of Morgan Keegan's bank group. "Like many CEOs, I think his timing is absolutely perfect. Not all bank CEOs will be so lucky."

Diversification strategy

Compass reports assets of $34.2 billion. Banco Bilbao Vizcaya Argentaria is a financial group with more than $520 billion in total assets and 7,500 branches in 35 countries, according to the company. In a statement, it said the BBVA Group maintains a leadership position in Spain, Mexico, and Latin America and has started a growth and diversification strategy in the U.S. and Asia.

"BBVA is seeking to become a global and diversified bank, with a focus on high-growth markets," BBVA Chief Executive Jose Ignacio Goirigolzarri said.

BBVA shares fell as the bank said it would sell more shares to help pay for the deal. The stock opened Friday with steep losses, but rebounded slightly by close of trading, down 2.52 percent at $25.57.

BBVA plans to issue 196 million new shares, worth around $5 billion. It will also sell stakes in several companies, including a stake of more than 5 percent in Spanish utility Iberdrola SA.

2nd-largest in Spain

Banco Bilbao is Spain's second-largest bank by market value after Banco Santander. Its Mexico-U.S. division includes Bancomer, Mexico's largest bank, as well smaller operations in Puerto Rico, California, Texas and Banco's U.S.-Mexico money transfer business. In June Banco Bilbao announced its acquisition of two Texas banks, to become the fourth-largest bank in the state.

The deal is subject to customary closing conditions, including necessary bank regulatory approvals in the U.S. and Spain and the approval of the stockholders of both Compass and Banco Bilbao.

Jones called the merger a "compelling combination."

He said it is expected to generate continued growth for Compass, particularly in the Southwest, and Compass will gain "the benefits of greater scale, scope and financial resources."

Francisco Gonzalez, chairman and chief executive officer of BBVA, said in a statement that Compass "has built a strong and highly profitable franchise that is well-positioned for continued growth."

"We are confident that by combining Compass with our banking operations in Texas, we can leverage the resources of BBVA to provide greater value for the shareholders of both companies," he said.

Copyright 2005 THE DECATUR DAILY. All rights reserved.
AP contributed to this report.

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