Virginia's wave of bank consolidation continued last week with an announcement by financial companies in Charlottesville and Richmond that they plan to merge -- becoming the state's eighth largest bank holding company.
The new firm. Jefferson Bankshares Inc., would be formed by a combination of NB Corp., of Charlottesville, and Southern Bankshares Inc., of Richmond. Assets of Jefferson would be about $700 million.
NB Corp.'s principal subsidiary is National Bank & Trust Co. of Charlottesville while the Richmond firm's flagship unit is Southern Bank.
If approved by stockholders and government regulatory agencies, the merger would take place at the end of the year. Jefferson would have its headquarters in Charlottesville with executive offices in both cities.
Under the proposed merger transaction, owners of Southern common stock would received 1.79 shares of Jefferson for each share owned while NB owners would get one share of the new firm for cach share they own.
Holders of $3.50 convertible preferred stock of Southern would receive 2.7969 shares in Jefferson for each of their shares. If the preferred owners elect not to receive the stock they could receive $44 in cash, as an option.
Southern now has 611,000 shaes of common and 37,500 shares of preferred outstanding while NB has 1.26 million common shares out.
H. Hiter Harris Jr., chairman of Southern, will become chairman of the new firm and remain chief executive of Southern Bank. NB Chairman Hovey Dabney will be president of Jefferson and remain chief executive of the Charlottesville bank.
The two bank executives said their decision to combine will enable them to "compete better" with the state's largest, and rapidly growing, holding companies, of which the $3.1 billion United Virginia Bankshares is the largest.
"Our two companies are very similar in size, operation and outlook, and the combinaton of these strengths with our respective market positions in the central and capital regions of Virginia will permit each of us, through our combined capital, to serve better both our individual and business customers," they said.
With a larger institution, larger lending limits will be available to business customers in competition with the state's larger institutions.
Southern banks have 24 offices in the Richmond and Williamsburg areas while NB banks have 35 offices in eight central Virginia counties, as well as Richmond. NB recently announced plans to sell its $11 million New Bank of Roanoke to Virginia National Bankshares. NB also has an agreement pending to buy the $17 million State Bank of Keysville.
If the new merger is approved, NB's bank in Richmond would be merged into Southern. Under changes in Virginia banking laws last year, state-wide mergers have been encouraged becaue there is greater freedom for holding company banks to open new branches. The most recent consolidation in the state, effective Dec. 31, combined Central National Corp. and Fidelity American Bankshares into Commonwealth Banks Inc., with assets of $1.7 billion, the sixth largest in Virginia.