Continuing its acquisition program in Virginia, Crestar Financial Corp. signed a definitive agreement to buy Warrenton-based Jefferson Savings and Loan, which has $265 million of deposits.
Richmond-based Crestar, with $14.3 billion in assets, said it would pay Jefferson shareholders $22.3 million in cash or stock, representing a rather hefty 1.9 times the thrift's stated book value.
The agreement reached last week is the second that Crestar has announced in recent weeks. The other purchase was of a $90 million-asset community bank in Manassas. So far this year, Crestar has also completed the acquisition of five thrifts in Virginia, adding some $2 billion in assets.
Most of Crestar's deals, including Jefferson Savings, have been in the northern Virginia/greater Washington, D.C., region, one of the fastest-growing areas of the country. Jefferson Savings operates eight branches in Warrenton, Charlottesville, Culpeper, Leesburg, Front Royal, and Luray.
"Warrenton is an area that Washington is growing towards, so it should give Crestar some good revenue opportunities," said Merrill Ross, an analyst with Wheat First Securities Inc. in Richmond. "I thought the price looked a little bit high. But there's a lot of opportunity there for Crestar to sell some other products, and there's certainly good expense-cutting opportunities."
Crestar investor relations spokesman Eugene Putnam said Crestar will eliminate three of Jefferson Savings' eight branches, which will help chop about 45% of the thrift's $7.7 million in annual noninterest expense.
Mr. Putnam predicted the deal would add "under 10 cents" to Crestar's 1995 earnings per share. Most analysts are estimating Crestar will earn about $5.05 a share next year.
Jefferson Savings, with $298 million of assets and a net worth of $11.7 million, has struggled recently with both asset quality and capital problems. It has $8 million in nonperforming loans, representing 3.9% of total loans, while its risk-based capital was 7.67% at June 30, which resulted in a risk-based capital deficiency of $535,000. The thrift has said it expects to be in compliance with risk-based capital standards by Sept. 30.
