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Southeast claims it has options

Southeast Banking Corp. said it still is talking with several parties about a sale of the company or an outside investment and has not been reduced to dealing with only NCNB Corp. "People have called and implied NCNB is the only one we were negotiating with. We are talking to several substantial people who have an interest and the ability to make significant investments in the corporation," Southeast's chief spokeswoman Ida Roberts said Monday. She did not elaborate.

NCNB and Barnett Banks Inc. have been the only two banking companies to publicly state they were considering a bid for Southeast. Barnett last week said it was no longer interested in pursuing Southeast.

Roberts said that while media attention has been focused on merger discussions, they represent "only part of an exploration" that includes Southeast's surviving on its own.

"As we like to stress, Southeast has been through worse economic cycles before and survived. We expect to do so in this one," she said.

Few outside observers share such a rosy scenario. Last Friday, rating agency Fitch Investors Service downgraded Southeast's subordinated debt.

Fitch also splashed cold water on the likelihood of a bank bid for Southeast without government aid.

"The possibility of an unassisted acquisition of Southeast appears remote," said Fitch. He also indicated that Southeast's credit trend is declining. Fitch lowered Southeast's $12-million in convertible debt to CCC from B-plus.

Fitch said Southeast's outflow of core deposits was "particularly troublesome."

Kidder, Peabody analyst Charles Peabody said he doubted there were currently serious bidders in the banking industry looking at Southeast other than NCNB. Even NCNB, he said, probably will not move without government guarantees against bad loans _ which first would require a federal seizure of Southeast.

NCNB also is examining a number of acquisition targets, Peabody said, including troubled First City Bancorp. in Houston _ of similar size to Southeast _ as well as weak institutions in the Washington, D.C. area, he said.

Peabody said that if the runoff in deposits at Southeast were to continue at its current pace _ Southeast's deposits fell 4 percent in April _ the bank's liquidity would be drained some time in the third quarter.

"The key is whether the runoff will continue at its current pace," said Peabody.

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