First Union Corp., Crestar Financial Corp., Signet Banking Corp., and Central Fidelity Banks Inc. have made preliminary bids for the three subsidiary banks of First American Bankshares Inc., sources said Wednesday.
First Virginia Banks Inc. and NationsBank Corp. may also be interested, the sources said. Some investor groups also are believed to have expressed an interest.
Meanwhile, Washington, D.C.-based First american on Wednesday reported an $8.3 million loss in the third quarter. The holding company has been experiencing financial difficulties since it was implicated in the Bank of Credit and Commerce International scandal last year.
Package Deal Likely
First American has disclosed that it would sell the three subsidiary banks, probably as a single package. The three banks are located in Virginia, Maryland, and Washington, and together hold $4.9 billion in assets.
Separately, First American is also selling its New York bank, which has $1.2 billion in assets.
Separately, First American is also selling its New York bank, which has $1.2 billion in assets.
Executive vice president Paul Adams said First American hoped to announce a deal "within the next week or two." He said final negotiations are continuing with "more than one" party, but declined to elaborate.
First Union has already publicly acknowledged its interest in bidding on First American's Washington, Virginia, and Maryland subsidiaries. Spokesmen for the other banks that are said to be interested in the deal declined to comment.
George L. Davis, First American's president and chief executive officer, said Wednesday that he expects to strip out bad loans from all four banks to facilitate their sale.
A so-called bad bank would be created to house the bad loans, which would be funded by the proceeds from the sale of the four banks, an "investment grade" loan, and other company funds.
Some of the bidders are said to be unhappy with how long the process is taking, worried because the value of the subsidiary banks would decline. "No deal improves with age, and this one smells progressively worse," said a source close to one of the bidders.
Mr. Adams insisted that the value of the banks is actually increasing.
"It's not eroding; it's coming back now. At least as far as troubled assets, collections are good and they're coming down. Deposits are no longer rolling out; they're coming back. Our demand deposits have actually been growing lately," he said.
But Mr. Adams said his company is moving as quickly as possible to sell the three banks. He said some of the bidders would conduct their due-diligence examinations concurrently to speed up the process.
A First American spokesman said the company would allow potential buyers to begin reviewing its book on Oct. 26, hoping for a sale of the three banks by yearend.
The three banks on on the block are: First American Bank of Virginia, with $2.5 billion in assets: First American Bank of Washington, with $1.2 billion; and First American Bank of Maryland, with $1.1 billion in assets. Prospective bidders are mostly interested in the Virginia bank, investment banking sources said.
The Federal Reserve Board, which has charged that BCCI illegally controlled First American, had set July 1993 as the target date for the company to sell its subsidiary banks.
