Never much of an acquirer, Union Bancshares Inc. of Bowling Green, Va., is scouting for targets in four Virginia markets as it seeks to double its assets in five years.
The company has accomplished the feat once already, having grown to assets of $1.7 billion since 2000. But that spurt was nearly all organic.
Now Union is actively looking for community banks with $100 million to $300 million of assets in Richmond, Fredericksburg, Newport News, and Charlottesville. According to the Federal Deposit Insurance Corp., 23 banks fit that bill.
Billy Beale, Union's president and chief executive, said he has driven all over the state lately to get to know community bankers.
"You want to make friends first, because when they do have a desire to do something different, you want them to come to you," he said.
Union has four bank subsidiaries: the $1.2 billion-asset Union Bank and Trust in Bowling Green; the $303 million-asset Northern Neck State Bank in Warsaw, Va.; the $86 million-asset Virginia Bank and Trust of Williamsburg; and the $57 million-asset Rappahannock National Bank in Washington.
It has done just four whole-bank acquisitions in its 103-year history. The most recent, in May 2004, landed the $198 million-asset Guaranty Financial Corp. of Charlottesville and had the biggest price tag: $54 million. The other three were tiny, costing a total of $19 million.
Still, Matthew Schultheis, an analyst with Ferris, Baker Watts Inc. in Baltimore, said Union is the type of buyer that sellers like - it allows the subsidiaries to operate under their own names and management.
As Mr. Beale put it, "We prefer to acquire good management and leave them in place and let them continue to grow and prosper."
That was the case with Rappahannock National, a 1998 pickup. But if the CEO does not want to stay on, Union will merge the bank into one of its subsidiaries. Guaranty Financial, for instance, was merged into Union Bank and Trust.
Though its headquarters is just 60 miles from the nation's capital, Union is not seeking to expand in the Washington suburbs of northern Virginia. The area has plenty of good community banks and a different customer base than Union's other markets, Mr. Beale said.
Instead, he said, the company is concentrating on what he calls the "golden crescent" - the area between and around Charlottesville to the west, Richmond to the east, Newport News to the south, and Fredericksburg to the north - because it is fast-growing, economically stable, and not as competitive as the Washington area.
Mr. Schultheis said one reason Union has done well in these markets is that it caters both to sophisticated suburbanites - it focuses on mortgages and consumer loans but also offers wealth management through Union Investment Services Inc. - and lower-income rural customers.
"They know the Joe Six-Pack type and take advantage of that when not a lot of banks are picking up on that," Mr. Schultheis said.
The four subsidiary banks have 45 branches. In the last nine years Union has installed six full-service branches in Fast-Mart convenient stores, and Mr. Beale said he is interested in opening more.
The company also emphasizes its network of automated teller machines; it has added nearly 70 ATMs over the last 12 months through partnerships with Fast Mart and the Food Lion supermarket chain.
Virginia has six banking companies with $1.2 billion to $1.9 billion of assets. At midyear Union ranked second in asset size, though Mr. Beale said being No. 1 is not the idea behind his acquisition campaign.
"We're not about being the biggest in Virginia," he said.
