Centra Financial Holdings Inc. in Morgantown, W.Va., is nearing a deal to buy the $236 million-asset Smithfield State Bank in Pennsylvania, Centra's chairman and chief executive officer, Douglas J. Leech, said Tuesday.
The $575 million-asset Centra had already received commitments from the majority of Smithfield shareholders to sell their shares but had been waiting for Smithfield's board to sign off on a deal.
Mr. Leech, who is also Centra's president, said that the board gave preliminary approval to deal late Monday, though they are still working out "some minor points of negotiation." The sale would be valued at about $28.8 million, he said.
Centra already has deals to with Smithfield stockholders to buy 81% of the bank's shares for $40 each, or about $23.3 million. Mr. Leech said that State and federal regulators are reviewing Centra's application to acquire the shares and that he expects to receive approvals within 60 days.
In terms of asset size, Centra is the fourth-largest of the 680 banking companies that have opened in the United States since 2000, according to Danielson & Associates, a Rockville, Md., investment bank.
Last year Centra's net income more than doubled from a year earlier, to $4.3 million, according to Federal Deposit Insurance Corp. data.
Mr. Leech said that Centra's bid to buy Smithfield is not hostile, because Smithfield shareholders had approached Centra this year about buying their shares, triggering negotiations with Smithfield's board.
Smithfield, founded in 1925, has struggled of late. It made just $727,000 last year, down 67% from two years earlier, and its efficiency ratio ballooned from about 46% on Dec. 31, 2003, to above 86% two years later, according to the FDIC.
Still, Mr. Leech said Centra finds Smithfield attractive because it has strong market share in a county that sits just over the border from Morgantown. Smithfield has the No. 3 market share in Fayette County, with 12% of its more than $1.9 billion of deposits.
The deal would be Centra's first since it was founded six years ago and would give the company its first branches outside its home state.
Centra has four branches in Morgantown and four others in the Martinsburg area of the West Virginia Panhandle.
The company would put its name on Smithfield's four branches, but Mr. Leech said that the Pennsylvania operation would have its own board, and that loan decisions would be made locally.
