International Bank of Washington, a diversified financial services company, has found purchasers for its significant investment in Financial General Bank Shares Inc., of Washington, one of the country's largest bank holding companies.
IB chairman George Olmsted, who played a major role in building both companies during the post-World War II era, said a group of private investors offered to buy the stock, subject to approval by regulatory agencies, including the Federal Reserve Board.
Because International Bank owns nearly one-fourth of Financial General stock, the Federal Reserve has questioned whether IB should not be considered a bank holding company and has sought to prevent acquisitions of business expansion by the Financial Services firm until its investment in the banking company is reduced to under five per cent.
IB, which once held an even larger interest in Financial General but reduced its investment under an earlier agreement with the Federal Reserve, has maintained that it is not now and does not want to be a bank holding company. Last year, IB accnnounced plans to dispose of most remaining Financial General shares.
Little is known about the potential new investors who have been talking with International Bank. Olmsted said only that the group of private investors plans to make the same offer for shares of Financial General owned by IB subsidiary companies in their stock portfolios.
International Bank itself owns about 1.2 million shares, or 22 per cent, of Financial General while various subsidaries own 80,000 shares as investments.
Olmsted declined to provide specific information on the proposed purchase price but said it was "more than market and less than book." Financial General Stock Exchange at $10.375 a share, up 87 and one half cents for the week but its book value per share is about $16. Thus the proposed stock sale is worth something in a range between $13 million and $20 million, if all the IB subsidiary shares also are sold.
International Bank has been listing its investments in Financial General as being worth $17.8 million ($15.36 per share), or slightly below book value.
The tentative stock puchase agreement was made with IB by an Alexanderia venture capital company called Inverness Capital Corp., purchased in 1973 by Harry Flemming and John Hanes Jr. Flemming was former President Nixon's special assistant for personnel while Hanes worked for a Wall Street firm and was an assistant secretary of state under President Eisen however.
Financial General is second only to Riggs National Bank in terms of its penetration in the metropolitan Washington market. The holding company controls among other institutions. Union First National Bank of Washington, Alexandria National Bank, Arlington Trust Co, Clarendon Bank & Trust. People National Bank of Leesburg, Round Hill National Bank and the American National Bank of Maryland based in Silver Spring.
Former Army Chief of Staff Harold K. Johnson is president and chief executive of Finance General while the company's former president, William J. Schuling, is chairman. The company has banking assets in excess of $2 billion and reported profits in the first nine months last year of $8.3 million ($1.45 a share) a gain of 46 per cent over $5.7 million ($99) in thsame period of 1975.