Joining the stampede into Virginia, United Bankshares of Parkersburg, W.Va., on Thursday announced plans to merge with Fairfax-based George Mason Bankshares.
The stock-swap deal, valued at $215 million, would create a bank with $3.5 billion of assets, $2.7 billion of deposits, and a solid foothold in the hotly contested Northern Virginia market. The merger is expected to close in the first quarter of 1998.
Observers said $2.5 billion-asset United's deal for George Mason-at a hefty three times book value-confirms that big banks aren't the only ones with an appetite for Virginia acquisitions.
"That is pretty much a new high for that size bank," said Lewis Sosnowik, bank analyst at Koonce Securities, Bethesda, Md. George Mason, with $963 million of assets, is one of the state's few independent banks in that asset range, and "that swelled the price," he said.
George Mason was attractive because it was "the last sizable franchise left in Northern Virginia," said Steven Wilson, United's chief financial officer. Also, its mortgage division is the largest in northern Virginia, he said.
The deal caps a summer-long acquisition binge by out-of-state banks. Since June, North Carolina-based Wachovia Corp. and First Union Corp. have snapped up three of the five largest banks in Virginia.
"When Wachovia finally came into the market, the dam broke," said David West, a bank analyst at Davenport & Co. in Richmond. "People have looked at Virginia and wondered for a long time when this would happen."
As part of the deal, George Mason Bank's 22 branches in Northern Virginia, Washington, and Maryland would become branches of United Bank, bringing United's total to 74 branches in three states and the District of Columbia.
Richard M. Adams would remain chief executive officer of United Bankshares. Bernard Clineburg, president of George Mason, would become United's president and chief executive officer of its Virginia banking division.
It is not United's first foray into the Old Dominion. The bank entered the state in 1990 with two small acquisitions. And last month, the company completed its acquisition of $200 million-asset First Patriot Bankshares, Reston, Va.
"United Bankshares came into Virginia in a small way, liked the situation, and wanted more," said Mr. West. "They could keep buying $100 million institutions and grow slowly, or buy a $1 billion bank and grow in one fell swoop."
George Mason has been growing at an impressive rate. Six years ago, the bank had just $160 million of assets and only four branches.
Mr. Wilson said there are seven George Mason branches overlapping existing United branches, but he was not prepared to say how many of those branches would close.
The market is still fragmented, and one move tends to trigger others as competitors try to keep market share, according to Angelina Billon, bank analyst, Johnston Lemon & Co., Washington.
Virginia independents that could still be targets include First Virginia Banks, Falls Church,; Life Bancorp., Norfolk; and F&M National Corp., Winchester.
Crestar Financial Corp., Richmond, another large Virginia independent, is still in acquiring mode and is not looking to sell, analysts believe.