An unidentified Mideast bank has purchased a major block of the stock of Financial General Bankshare Inc. in an apparent bid to gain control of the $2.2 billion Washington bank holding company.
Financial General revealed the potential takeover attempt in a terse announcement late yesterday which provided few details.
Mideastern interests have shown interest in buying into Washington area banks and were reported by several sources to be involved in the Financial General bid.
The company's announcement said it "has reason to believe that possibly in excess of 15 percent of its outstanding common stock" has been acquired by "a foreign bank which may be seeking to obtain control of the company."
"Some purchases have been made in private transactions above market prices," Financial General said, and "private offers have been made for additional shares above the market."
Informed sources said Financial General Chairman B.F. Saul and president J. William Middendorf both had been approached by representatives of unnamed foreign investors about selling their stock.
Financial General officials said they did not know or could not reveal the name of the firm that appeared to be seeking control.
Federal regulations require anyone buying more than 5 percent of the stock of a bank holding company to notify the firm and regulators within 30 days. One Financial General officer said the company had not been formally notified of the stock acquisition.
President G. William Moddendorf said he was "trying to find out myself" what was behind the apparent takeover bid.
Some Financial General board members reportedly have been asked to sell their shares. Stockbrokers said recently there had been some increase in trading in the shares of the company.
Financial General's Vice President paul Collis said the purchases were not related to purchases of Financial General shares by Washington real estate investor Saul.
Saul recently became chairman of the board of Financial General after buying about 11 percent of the shares from subsidiaries of International Bank. International Bank had been forced to sell the shares by the Federal Reserve Board in a complex dispute over its role and control of Financial General.
Saul and the companies he controls paid $12.50 per share for the 11 percent block of shares. The stock recently has traded for about $13 a share.
The issue was one of the biggest gainers among Washington securities during 1977, rising in value nearly 40 percent to $11.25 at year end.
Sources close to the company said the stock was still undervalued, and the company had prospects of sharply improved earnings. Only hours before revealing the takeover bid, Financial General reported a 37.8 percent increase in earings for the fourth quarter of 1977 and said it was planning major expansion.
Financial General, which controls 15 banks with 143 offices, had been banned from acquiring additional banks during its lengthy hearings withe the Federal Reserve over control by International Bank.
A week ago the Federal Reserve removed those restrictions. Middendorf said the company "will exercise its restored freedom of acquisition to expand its ownership of banks."
Middendorf said Financial General will look for banks to buy in the Washington area and also may expand its present chain of banks with additional branches.
For the fourth quarter, Financial General reported earnings of $2.982 million (48 cents a share), up from $2.164 million (35 cents) last year. For the year, profits rose to $10.6 million ($1.71) from $8.9 million or ($1.44).
Middendorf and a large group of investors who backed him gained control of the bank during the second half of the year. He said elimination of a costly computer contract and internal reorganizations were factors in the improved earnings.
Financial General's banks include Union First National of Washington, Alexandria National Bank of Northern Virginia, Arlington Trust Company Inc., Clarendon Bank & Trust, Peoples National Bank of Leesburg, Round Hill National Bank and American Bank of Maryland.