Adams National Will Merge With W.Va. Bank

The investors who control Abigail Adams National Bancorp, the parent company of the troubled Adams National Bank, have decided to merge it with a West Virginia bank that they also control in a deal designed to ensure Adams National can weather the financial crisis.

Premier Financial Bancorp will buy District-based Abigail Adams for stock valued at $10.9 million, the companies said yesterday.

The largest shareholder in both companies is West Virginia businessman Marshall Reynolds, who specializes in buying troubled banks. Adams National is the third local bank to agree to be sold in two months, following the purchase of Chevy Chase by Capital One Financial and the Provident Bank's purchase by M&T Bank. Charlotte-based Wachovia, a dominant local presence, is in the process of being sold to Wells Fargo.

The deal means the end of a local bank founded in 1978 as Women's National Bank, an institution mostly owned and run by women that focused on lending to women and minorities. The bank moved to more traditional business and in the mid-1980s took the name Adams National to signal that shift.

It also means the creation of a company with consolidated assets of approximately $1.2 billion, with about $950 million in total deposits and $800 million in total loans, the companies said. The impact for customers of Adams National, which has five branches in the District and one in Silver Spring, will not be immediate.

"We believe the merger with Adams presents us with another opportunity to revitalize an organization to become a healthy and profitable community banking institution," Robert W. Walker, chief executive of both banks, said in a statement yesterday.

The banks could not be reached for comment.

Walker, chief executive of Premier Financial since 2001, was named president and chief executive of Abigail Adams, as well as interim president and chief executive of the bank, in September.

Adams National faces rising losses on real estate loans, mostly for condominium projects in the District. It disclosed this past summer that its regulator, the Office of the Comptroller of the Currency, had ordered it to improve its financial condition. Jeanne Delaney Hubbard had resigned as chief executive of both the parent company and the bank in September, on the eve of a meeting with the OCC.

Several allies of Reynolds were appointed to Adams National's board in the fall, consolidating his control and setting the stage for the acquisition.

Abigail Adams National Bancorp is parent company to both Adams National and Consolidated Bank & Trust, a $92 million bank headquartered in Richmond.

Reynolds took control of Adams National's board in 1998, and with his wife owned about 28 percent of the holding company as of April, according to securities filings. When Reynolds came to the District bank, he brought Hubbard with him: She became chief executive of the holding company and took over as chief executive of Adams National in 2005 as well.

The bank steadily moved toward real estate lending, part of a broader trend in the banking industry.

The bank made loans to both condominium developers and affordable housing projects, but with the souring real estate market, some developers were unable to make good on the loans.

Premier Financial Bancorp also owns three banks in West Virginia: Boone County Bank, First Central Bank and Traders Bank. It also owns Citizens Deposit Bank and Farmers Deposit Bank in Kentucky and Ohio River Bank in Ohio.

Under terms of the definitive agreement, each share of Adams National Bancorp common stock will be converted into 0.4461 shares of Premier Financial Bancorp common stock. Premier National Bancorp anticipates that it will issue approximately 1,545,000 shares of its common stock.

The deal is expected to close sometime in the first half of 2009 and is subject to approval from regulatory agencies and the shareholders of both companies.