1st Virginia Buying 7 Signet Branches in Va., Md.

First Virginia Banks Inc. has agreed to buy seven Signet Banking Corp. branches and $150 million of deposits for an undisclosed sum as Richmond, Va.-based Signet prepares for its absorption by First Union Corp.

The branches, on the Eastern Shore of Chesapeake Bay in Maryland and Virginia, would expand First Virginia's regional presence. The $9 billion- asset Falls Church, Va., company already operates 12 branches along the Eastern Shore.

"We are very pleased to have the opportunity to increase our presence on the Eastern Shore and to give our customers the added convenience of seven new branches and eight ATMs," Barry J. Fitzpatrick, First Virginia chairman and chief executive officer, said in a statement. "We're also pleased to welcome the customers and the very professional staff members of those branches to our organization."

The seven Signet branches are in Mappsville, Va., and in the Maryland towns of Cambridge, Chestertown, Easton, and Salisbury. First Virginia operates 309 offices in Virginia, 56 offices in Maryland, and 25 offices in eastern Tennessee. The acquisition is slated to close in February.

The move by Signet to sell the branches is the first step in what probably will be widespread branch sales and closings in the state, observers said. Roughly half of First Union's 210 Virginia-area branches are within two miles of a Signet branch.

"They'll be closing a lot of branches and selling a lot as well," said Holly Clark, an analyst at Scott & Stringfellow Inc. in Richmond.

First Union's deal to buy Signet is scheduled to close by yearend.

Charlotte, N.C.-based First Union, which is paying about $3.25 billion in stock for Signet, has said it will try to cut $242 million of costs in connection with the deal.

The agreement to sell branches to First Virginia was not a surprise. Less than two months before agreeing to sell itself to First Union, Signet had announced a restructuring that would include shuttering or selling 39 branches. Those plans were put on hold so that First Union could decide what configuration of branches would suit its needs best.

No definite plan has been set for large-scale closings and sales at this point, said First Union spokeswoman Laurie Hedrick. But the North Carolina company has reviewed Signet's earlier plan and approved the sale of some of the 39 branches, she said.

The seven branches sold to First Virginia are the only ones put out to bid so far. The others are expected to follow soon, the companies said.

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