After First Union Corp. unveiled plans Monday to buy Signet Banking Corp., investors rushed to buy shares of Crestar Financial Corp., the largest independent bank left in Virginia. Its shares jumped $2.625, to $45.875.
The handful of remaining banks of significant size in the state also enjoyed a bump in their stock prices on takeover hopes. But Crestar, with $22 billion of assets, was by far the largest and got the most attention. Its gain of 6.07% in share price was also the biggest in the group.
Life Bancorp, a $1.4 billion-asset company in Norfolk, had the second biggest gain-5.7%-appreciating $1.375, to $25.125. Shares of First Virginia Banks Inc., a $9 billion-asset company in Falls Church hit $64.18, up $2.06.
George Mason Bankshares, Fairfax, with $963.3 million of assets, rose 75 cents, to $28, and F&M National Corp. of Winchester, $2.36 billion of assets, reached 37.5 cents to $26.66.
Riggs National Corp., a $5.4 billion-asset bank based in Washington, D.C., but with operations in adjacent northern Virginia, gained 87.5 cents to $21.375.
Analysts said Crestar appears the likeliest candidate for acquisition in the hot Virginia takeover environment, given its statewide reach in terms of market share and geographic location. But they also said a deal is not necessarily imminent.
"For the next year or so, Crestar can continue on its independent course," said analyst Anthony R. Davis of Dillon Read & Co. "It's not running out of the growth opportunities."
Nancy A. Bush, regional banking analyst at Brown Brothers, Harriman & Co., said a deal for Crestar "is no more likely today than it was yesterday." But she also noted that the bank has had offers for last decade, and "has said no to all of them."
Wachovia appeared to trigger the merger frenzy in the state earlier this year, buying both Central Fidelity Banks Inc., Richmond, and Jefferson Bancshares, Charlottesville. Quickly, it was the largest bank in Virginia, but not for long.
First Union will take over the lead role with its announced merger, pushing Wachovia into the runner-up spot, and NationsBank Corp. into third place.
Although a deal between Crestar and NationsBank might raise antitrust issues in "certain markets, NationsBank may be willing to make divestitures accordingly" to make a deal work, said Angela Billon, bank analyst, Johnston Lemon & Co., Washington. Ms. Billon said the recent activity by NationsBank's archrivals First Union and Wachovia "will push them" into action.
Mr. Davis said Crestar, which has pursued acquisitions of its own in Maryland, has not been under the same pressures as its competitor. Signet, which had turned in poor performance over the past couple of years, is in the midst of a complex restructuring initiative.
Even so, as the superregionals continue to pay up for dominance, anything is possible. "If they got a 'Godfather' offer," they'd do what's best for shareholders, Mr. Davis said.
Several analysts said Mellon Bank Corp., PNC Bank Corp., CoreStates Financial Corp., or Banc One Corp. might make a move to the state, but would be hard pressed to pay a premium for Crestar similar to the Signet/First Union deal, at 3.5 times book value.
"In order to pay that kind of rate, you need some prior presence in the state to be able to consolidate," said banking lawyer Ronald Janis, a partner in Pitney, Hardin, Kipp & Szuch, Morristown, N.J. He predicted accelerated consolidation among the smaller Virginia banks, whether from outside or within the state.