United Virginia Bankshares Inc. and Dominion Bankshares Corp. have ended merger discussions that began last October, officials of the two bank holding companies announced yesterday.
They would not comment on why the talks broke off, but sources close to the discussions said that Dominion, the fourth biggest bank company in the state with assets of $3.2 billion, finally spurned the overture from United Virginia, the state's largest with assets of $4.8 billion.
Warner N. Dalhouse, Dominion's chairman and chief executive, said he would not comment immediately on the announcement or on the events that led to a breakdown of the discussions. A United Virginia-Dominion combination would have created a bank with more than $8 billion in assets and more than 350 offices across the state.
Although United Virginia is the biggest bank in the state, the Richmond-based institution would lose that title if the proposed merger of Virginia National Bankshares and First & Merchants Corp. receives shareholder and regulatory approval. The combination of the second-biggest and fifth-biggest banks in the state would produce an institution with $7 billion in assets that would become the largest bank company in the Middle Atlantic states.
United Virginia and Dominion huddled in secret until March 8, when both banks announced that they were holding talks. That was less than two weeks after Virginia National and F&M said that they had agreed in principle to merge. There "is no doubt the United Virginia-Dominion talks were coaxed along by the Virginia National announcement," said a source close to the now-abandoned discussions.
A spokesman for United Virginia said that, to his knowledge, regulatory authorities had made no contact with the banks, or had the banks reached the stage of discussions where they felt it necessary to talk to state or federal regulators.
Banking industry sources said that a few major shareholders of United Virginia were upset at the prospect of a merger, but a United Virginia official said that no stockholder had voiced any objections.
One Washington official said he was surprised that the talks broke off, and that he saw the United Virginia-Dominion merger not only as a logical follow to a Virginia National-F&M merger, but as part of the trend to banking consolidation not only in Virginia but across the country.