Washington mortgage banker B. Francis Saul II, has acquired nearly 11 per cent of the stock of Financial General Bankshares Inc. and has been elected chairman of the Washington bank holding company.
J. William Middendorf, II, who led a group of investors who took control of Financial General last spring, gave up the chairman's post but remains president and chief executive officers.
Saul's replacement of Middendorf as chairman of the holding company that owns local banks with assets of $2 billion was described as "friendly" by a corporate spokesman. Neither Saul nor Middendorf was available for comment.
Saul recently became the largest single stockholder in Financial General, by spending $2.9 million to acquire 234,000 additional shares, about 4 per cent of the outstanding stock.
Companies controlled by Saul already owned 6.7 per cent of Financial General. Saul is president of B. F. Saul Co., a mortgage investment and real estate firm, and heads a number of other companies, including B. F. Saul Real Estate Investment Trust and Chevy Chase Savings and Loan.
As chairman, Saul will not work full time for Financial General; day-to-day operations will remain the responsibility of Middendorf, the spokesman said.
Saul was elected chairman last Friday at a Financial General board of directors meeting and the appointment was announced yesterday.
The shares that gave Saul his major block were acquired from subsidiaries and affiliated companies of International Bank, the Washington firm that previously controlled Financial General.
International Bank has been disposing of its interests in Financial General under pressure from the Federal Reserve Board, which said IB was illegally operating as a bank holding company without being registered to do so.
Last April a controlling interest in Financial General, about 22 per cent of the stock was acquired from International Bank for approximately $15 million by a group of 29 investors headed by Middendorf.
At that time, Middendorf obtained options to and rights of first refusal to buy additional shares amounting to about 4 per cent of Financial General from five insurance companies affiliated with International Bank.
Those options apparently were never exercised, by Middendorf, and the companies agreed instead to sell to Sual, at the same price, $12.5 per share, according to reports to the Securities and Exchange Commission.
Financial General controls a group of Washington banks, including Union First National Bank of Washington, Alexandria National Bank of Northern Virginia, Arlington Trust Company, Clarendon Bank and Trust, the Peoples National Bank of Leesburg, the Round Hill National Bank and American Band of Maryland.
In reporting his acquisition of the additional shares to the SEC, Saul said he did not intend to seek control of Financial General. But he said he would "seek representatio on its board of directors and the opportunity to have some influence on management and policies."
The additional shares were acquired personally by Saul. Prior investments were in Financial General were by various Saul operations, including B. F. Saul Company, Columbia Credit Co., Chevy Chase Lake Corp., and Manor Investment Co.