Updated from 8:34 a.m. EST

National Commerce Bancorporation

(NCBC)

and

CCB Financial

(CCB) - Get Report

said Monday that they had agreed to merge in an all-stock deal valued at about $1.94 billion.

Calling it a "merger of equals," the companies said NCBC shareholders would have control of approximately 53% of the combined company, while CCB Financial would own approximately 47% of the merged company.

CCB Financial shareholders will receive 2.45 shares of NCBC common stock for each share of CCB they own. The transaction values each CCB Financial common share at $48.23, based on Friday's closing prices, a 25% premium to CCB's price on Friday.

But that premium narrowed Monday, as NCBC tumbled 3, or 15%, to 16 11/16 in late morning trading. CCB was trading up 13/16, or 2%, 39 3/8.

Jacqueline Reeves, an analyst at

Putnam, Lovell & Thornton

, was bullish about the transaction, saying that shareholders would benefit from the deal.

"We think it is a good deal for shareholders in the longer term," Reeves said. "Even if there are no cost savings, this will still be accretive to earnings."

Reeves said she expected the deal to increase earnings by $1.23 a share in 2000 and $1.40 a share in 2001, even if there are no benefits from cost savings.

Reeves upgraded her rating on CCB to a buy from a hold following the news and maintained her buy recommendation on NCBC. Her firm has not done any underwriting for either of the banks.

The companies said they expected the transaction to add 18.8% to NCBC's estimated 2001 earnings per share based on estimates, assuming that 85% of the merger is completed. The company was previously expected to earn $1.16 a share, based on a survey conducted by

First Call/Thomson Financial

. They also estimated that the combined company would reduce its operating expenses by approximately $50 million annually, representing 12% of its combined expense base.

The combined company, which will retain the name National Commerce Bancorporation, will be headquartered in Memphis, Tenn., with its operations headquarters in Durham, N.C. The company will have assets of $15 billion and a pro forma market capitalization of $4.2 billion.

Thomas Garrott, chairman and chief executive of NCBC, will become chairman of the combined company, while Ernest C. Roessler, chairman and chief executive of CCB Financial, will become chief executive of NCBC.

Based in Memphis, NCBC has $7.3 billion in assets and operates 162 branches in seven Southeastern states. CCB Financial of Durham has $8.2 billion in assets and operates 208 branches in North and South Carolina.

The merger, which has been unanimously approved by the boards of directors of both companies, is conditioned upon standard regulatory and shareholder approvals and is expected to close in the third quarter of 2000.

Credit Suisse First Boston

and

Morgan Stanley Dean Witter

served as advisors to NCBC.

J.P. Morgan

advised CCB Financial on the transaction.