Just days after First Union Corp. pumped up the volume on Virginia bank merger activity, a large community banking company is paying up for its debut in northern Virginia.
MainStreet Banking Group, Martinsville, Va., has agreed to pay $17.2 million in stock for $86.2 million-asset Tysons Financial Corp. That's about 2.3 times Tysons' June 30 tangible book value and almost 20 times trailing 12-month earnings.
The acquisition of Tysons and its four branches would give $1.4 billion- asset MainStreet, which is based in southwestern Virginia, a foothold in the thriving northern Virginia suburbs of Washington. It also complements a deal announced in June to buy Commerce Bank, College Park, Md. Both deals, which must be approved by shareholders and regulators, are expected to close in the fourth quarter.
The banks would become the ninth and 10th subsidiaries of MainStreet.
"We think that the market this represents in northern Virginia and suburban Washington, D.C., is a very dynamic and growing market," said Rebecca J. Jenkins, executive vice president of MainStreet.
The announcement came in the wake of Charlotte, N.C.-based First Union's own pricey deal July 21 for Signet Banking Corp. First Union is paying $3.25 billion in that stock purchase, or about 3.5 times book value.
And that transaction, in turn, came after dual June purchase announcements in Virginia by First Union's North Carolina rival Wachovia Corp., Winston-Salem.
Wachovia is buying Jefferson Bankshares of Charlottesville and Central Fidelity Banks Inc. of Richmond.
Meanwhile, the sudden merger frenzy continued to send stocks surging in the Virginia and Washington markets, catching a New York investment partnership flat-footed.
Tontine Management had tried to double its ownership in a Washington thrift "for investment purposes" but was caught by the price jumps.
Officials of Tontine Management, led by general partner Jeffrey L. Gendell, had sought to buy a significant chunk of Independence Federal Savings Bank, increasing its ownership to 9.9%, from the 4.9% it had owned for two years.
Independence, a $263 million-asset thrift, has three branches in Washington.
But after buying enough to increase its stake to 5.5%, the group came up short when First Union's announcement sent prices soaring. From July 7 to 23, Independence's price jumped 46%, to a 52-week high of $13.50 per share, and stockholders no longer wanted to sell, sources close to Tontine said.