Virgina thrifts could soon become hot properties.

On July 1 full interstate banking goes into effect in the state, and analysts expect an increase in thrift acquisitions.

"The buyers are there," said Merrill H. Ross, a senior financial services analyst with Wheat First Butcher Singer Inc., Richmond. "Thrifts... look like a good value."

Ms. Ross sees North Carolina's First Union Corp. and two Richmond-based companies -- Crestar Financial Corp. and Signet Banking Corp. -- shoring up market share by buying thrifts. That way they can protect their franchises from banks outside the southeastern banking compact.

Now's a good time to act, because thrifts in Virginia are a steal. Publicly held Virginia thrifts followed by Wheat First trade at just 92% of book value, well below the ratios for all thrifts (107%) and banks (156%) it follows. So banks can expand a franchise and build their deposit base relatively cheaply. Also, banks can cross-sell to newly acquired thrift customers and "really ramp up the revenues," Ms. Ross said.

"I don't think the big banks are looking for those [thrifts] with loan origination capability," said Celia Martin, a research analyst with Friedman, Billings, Ramsey & Co., a Washington-based brokerage and investment banking firm. "What they need is a deposit base."

Prime Candidates

Analysts say likely targets include Arlington-based Columbia First Bank; Ameribanc Savings Bank, Annandale; Virginia Beach Federal Savings Bank; and Cenit Bank, Norfolk.

Columbia First's stock has been surging. In one two-session period a week ago, it jumped nearly 20%. But it's not because the thrift may be a target, said Thomas Schaefer, president and chief executive. He attributed the uptick to strong earnings and the fact that so few shares -- about 60% -- are held by the public. The rest are held by management. Ms. Ross thinks Columbia First, the state's largest thrift with $2.5 billion in assets and 33 branches in Virginia, Maryland, and Washington, D.C., would make a nice fit for First Fidelity Bancorp., Lawrenceville, N.J., or PNC Bank Corp., Pittsburgh. "[Such banks] might view this as gaining a foothold in a very attractive market," she said. "We think it's a pretty strong candidate for consolidation."

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