Union Bankshares in Richmond, Va., believes that time is on its side.
The $7.8 billion-asset company is inching toward $10 billion in assets, where it will face heightened regulatory scrutiny. At the same time, management is feeling no pressure to lock down a big acquisition to propel the company over the threshold.
Based on its current trajectory, Union is unlikely to hit $10 billion until 2019 unless it completes a deal, said William Beale, the company's president and chief executive. Acquisitions could hasten that day, and Union is certainly looking.
A smaller purchase could take place before Union reaches the next key regulatory mark, Beale said. By doing so, he said, Union would eventually set itself up "for the larger acquisition." Something bigger, such as a $4 billion-asset bank, could be possible if Union finds itself bumping up against the $10 billion mark in 2018.
"I think it's all about planning and preparation," Beale said.
There are pros and cons to stringing together a series of small acquisitions, industry observers said. On one hand, it can take up considerable time and effort to integrate multiple banks.
Smaller deals, however, are often simpler and easier to digest, said Austin Nicholas, an analyst at Stephens. Big transactions also tend to carry more risk, he added.
Nearly three years have passed since Union completed its last bank acquisition. The purchase of the $3.1 billion-asset StellarOne in Charlottesville, Va., nearly doubled Union's assets, but it also spurred the first major lender desertions under Beale's watch.
Park Sterling in Charlotte, N.C., opened a Richmond office in 2014 after poaching several StellarOne lenders, along with executives who had been in charge of wealth management and mortgage banking. (StellarOne's former chief executive, Ed Barham, became CEO of Cordia Bancorp in Midlothian, Va., which recently agreed to sell itself to First Citizens BancShares in Raleigh, N.C.)
Union is now returning the favor. The company is opening a Charlotte office after hiring a series of commercial lenders who previously worked at NewBridge Bancorp, which was recently sold to Yadkin Financial.
Those experiences have taught Beale a lot about retention efforts after an acquisition, and could prompt Union to form a monetary pool to hold on to top lenders the next time it announces a deal.
"I think everybody is out looking for loan producers, wherever they are," Beale said. "We will be more highly attuned to the revenue producers in the next transaction and trying to get in front of them quicker than we typically do."
Entering Charlotte shows that Union is willing to expand without a deal, which Gary McNorrill, chief operating officer and a managing director for Banks Street Partners, said is a likely strategy for the company. If the company does expand, it could involve mortgages or wealth management, he said.
Union is also likely to push more into neighboring states such as North Carolina or Maryland while becoming a bank with up to $15 billion in three years, Nicholas said.
Beale, for his part, said that Union has a target list for acquisitions but that its agenda could change as merger activity continues in the region. "The market is going to move a lot, and there's going to be more consolidation between now and 2018," he said.