FCNB Corp.'s push deeper into suburban Washington should put the Frederick, Md., company on more buyers' wish lists, analysts say.
On June 23, FCNB said it would buy Rockville, Md.-based Capital Bank for $42 million of stock. Capital, with $170 million of assets, operates in affluent Montgomery County and has two branches in Washington and one in Virginia's thriving Fairfax County. The deal is expected to close in the fourth quarter.
Three days later, the company's bank subsidiary, FCNB Bank, bought seven Maryland branches-including four in Montgomery County-from First Virginia Banks Inc., Falls Church.
After the Capital deal closes, FCNB would have assets of $1.2 billion, with 32 branches in seven Maryland counties, Washington, and northern Virginia. Its geographical reach, coupled with passing the $1 billion milestone, should pique the interest of buyers already active in the area.
"This deal absolutely puts them on radar screens," said Collyn Bement, an analyst at Ferris Baker Watts in Baltimore. "They were already pegged as an attractive candidate, and now they will be on even more minds."
Arnold Danielson, chairman of Danielson & Associates, Rockville, said "there is no question" FCNB will get looks from potential buyers.
But A. Patrick Linton, president and chief executive officer of FCNB, said the company is not expanding in order to sell.
"We are committed to growing our franchise," he said. "If that gets people's attention, that is fine. But it is not the reason we are growing."
The same factor that makes his bank an attractive takeout target, Mr. Linton said, is also a compelling reason to remain independent.
"There are not many players our size in Montgomery County," he said. "We believe we can fill the role as the premier community-minded bank in the area."
Mr. Danielson said Wachovia Corp. and BB&T Corp., both based in Winston- Salem, N.C., and Parkersburg, W.Va.-based United Bankshares all could have an interest in FCNB. Each has announced deals in the last year to establish a presence in suburban Washington and could want to bulk up.
But prospective buyers might wait until the deal for Capital is completed before bidding.
Pending deals "make it difficult to gauge just what a bank is worth," Mr. Danielson said. "It takes time for merger-related charges to clear so the value of the franchise can be determined."
Meanwhile, the mere speculation that FCNB may be bought could help keep Wall Street satisfied, Mr. Danielson said.
"FCNB is buying Capital to make sure they look attractive, regardless of whether they want to sell," he said. "If you are not an attractive franchise to buy, your stock price will suffer."
