A West Virginia bank holding company's plan to merge with a neighbor would give it a much-needed boost in a fragmented marketplace.
Horizon Bancorp, a $942 million-asset institution in Beckley, W.Va., has tentatively agreed to acquire $44.6 million-asset Beckley Bancorp for $16.9 million in cash. The deal is expected to close in the third quarter.
The company expects the deal to put its asset total above $1 billion by closing and to solidify its position as market share leader in Raleigh County, ahead of the West Virginia subsidiary of Columbus, Ohio-based Banc One.
"To continue to perform the way we have in the past, we have to grow," said Duane Blankenship, vice president and chief financial officer of Horizon. "We're really excited to get this. Our core deposits are just the top priority now."
Although acquiring Beckley wouldn't do much for Horizon's market share statewide, Mr. Blankenship said the company needs to increase deposits to compete in a marketplace crowded by larger regional and local banks. Horizon ranks No. 7 in deposit market share in West Virginia, just below Charleston-based City Holding Co.
Horizon is a solid performer, with return on average assets of 1.45% in 1996 and return on average equity of 13.08%.
Martin Friedman, vice president and analyst at Friedman, Billings, Ramsey in Arlington, Va., said the proposed merger is a good move for Horizon, which needs to buy smaller banks to compete with its rivals. Reaching the $1 billion-asset mark would make it a good competitive size, he said.
"Horizon could definitely compete because they're the local institution," Mr. Friedman said. "People want to do business with the local institution ... rather than going to Ohio to do business."
Horizon, a so-called super community bank, owns five community banks: Bank of Raleigh, Twentieth Street Bank, Greenbrier Valley National Bank, National Bank of Summers, and First National Bank in Marlinton.
Duane K. Sellards, president and CEO of Beckley Bancorp, said the merger would let his bank join a company that already knows the community. Beckley would be merged into the Bank of Raleigh.
"An important factor in the decision was the similar community banking philosophies of the two companies," he said.