First Union Corp. announced an agreement Thursday to acquire Columbia First Bank of Arlington, Va., for $222 million in stock.
First Union, based in Charlotte, N.C., said it would pay 1.67 times Columbia First's book value of $35.93 a share. The deal, expected to close in the second half, would make First Union second in market share in the increasingly consolidated metropolitan Washington banking market.
First Union's Charlotte-based archrival, NationsBank Corp., is currently No. 1 in the Washington area, with $9 billion, or 17.3% of the market's $52 billion of total bank and thrift deposits. First Union, currently No. 3, will nearly double its deposits in the area after the Columbia First acquisition, to $6.2 billion or 11.6%.
First Union's assets in the area will increase to $8 billion from $5.1 billion.
The $77 billion-asset superregional said its purchase of $2.9 billion- asset Columbia First for $60 a share would not dilute 1995 earnings and would be slightly accretive in 1996. First Union said it will purchase an amount of its own stock on the open market equal to at least 50% of the number of its shares to be issued in the deal.
Columbia First was a mutually owned thrift, known as Columbia First Federal, until it converted to public ownership in 1985 at $10 a share. It promptly ran into problems during the real estate debacle that hit the Washington area in the late 1980s. The current management has been in place since 1989.
After losing $2.9 million in 1990 and $900,000 in 1991, the thrift returned to profitability in 1992. It earned $12 million last year, for a 0.45% return on assets and 9.06% return on equity.
Following the acquisition, Columbia First's 33 branches will be parceled out to three different First Union units.
