Less consolidated than its neighbors, Virginia is proving itself happy hunting grounds for hungry, out-of-state banks.
The latest example: One Valley Bancorp of Charleston, W. Va, which said last week it intends to acquire CSB Financial Corp., a Lynchburg thrift, in a deal valued at $58 million.
The move was just the latest in a series of acquisitions in Virginia this past year by out-of-state banks that have found slim pickings in their own backyards. First American Corp. of Nashville, First Maryland Corp. of Baltimore, and First Union Corp. of Charlotte, N.C., have all made recent purchases in the state.
The banking industry is particularly highly consolidated in West Virginia and North Carolina, leading banks that are eager to grow to reach into Virginia.
"There's always been interest in Virginia," said John A. Bailey, analyst at Friedman, Billings, Ramsey and Co., in Arlington, Va. "But now even more so."
The main factor driving the deals, analysts said, comes down to numbers - Virginia has a total of 190 banks and thrifts, more than three times the number in North Carolina and about one-third more than West Virginia has.
"West Virginia is not known for its economic growth," said David Stumpf, analyst at Wheat First Butcher Singer in Richmond, Va. "So these companies are dependent on acquisitions to grow, but because of a limited number of deals available there, it's only natural for them to look beyond the state."
For One Valley Bancorp - the largest West Virginia-based bank with $3.8 billion of assets - the deal for the $329 million-asset thrift is the first cross-border incursion. Management downplays the significance of going out of state, however.
"The fact that it is in Virginia is really secondary," said chief executive J. Holmes Morrison. "It fell within our radius and is a natural extension for us."
The acquisition will be accounted for as a purchase, as opposed to a pooling of interests, because One Valley will be repurchasing up to 1.8 million shares of its stock to be used for the transaction. The arrangement allows the bank to leverage its capital, while giving CSB Financial shareholders nontaxable stock.