Warner N. Dalhouse, chairman of Dominion Bankshares Inc., said he broke off merger talks with United Virginia Bankshares Corp. last week because Dominion would have had to dispose of many profitable offices to satisfy antitrust requirements yet still run the risk that regulators would not approve the combination.

From Dominion's point of view, he said in a telephone interview, the merger "didn't seem feasible."

The March 8 announcement that United Virginia and Dominion--the state's biggest and fourth biggest banks--were talking about merging followed by only two weeks the announcement that Virginia National Bankshares and First & Merchants Corp. had agreed in principle to a merger. Those banks are ranked second and fifth in the state.

The impending merger of those two banks also figured in Dalhouse's decision:

Dominion and United Virginia would be selling off branches or subsidiary banks in cities or regions in which they overlapped, and so would Virginia National and First & Merchants--for the same antitrust reasons.

"The only potential buyers would be other Virginia banks," Dalhouse said. But four of the five big banks would be eliminated as potential purchasers, he said.

"We'd probably have had to sell the branches or small banks at bargain basement prices," because of the limited number of potential buyers, the large number of branches that would have to be sold by the four big banks and the knowledge by the potential purchasers that the banks would have to have sales contracts in hand before they could approach the regulators for approval.

He said it would have taken about nine months to a year to make all the necessary sales, plus an equal period for the Federal Reserve Board to consider the merger application. "We were looking at one-and-a-half to two years before we could get a decision."

While all this was going on, Dalhouse said, there would be "a high level of anxiety among our people."

There would not have been room for all executives of both bank companies were there a merger. "Many of our talented people would look for other opportunities," Dalhouse said. "Then if the merger application were denied, we would have suffered greatly."

Dalhouse said that Dominion's antitrust consultants predicted that even if the two banks sold off branches in competing areas--to prevent too big a concentration of deposits in one bank in those regions--there remained a large likelihood that federal regulators would turn down the merger application.

He said the consultants had suggested that the Federal Reserve Board, which would have to pass on a proposed Dominion-United Virginia combination, is harder on mergers than is the Comptroller of the Currency, the federal regulator who will consider the proposed merger of Virginia National and First & Merchants.

"We were advised that even with divestitures, the probability of Federal Reserve denial continued to be high," Dalhouse said. Since the Virginia National-First & Merchants merger had a head start on the potential Dominion-United Virginia combination, the Federal Reserve would have had to approve a merger that would leave the four biggest banks in Virginia with 60 percent of the deposits.

Today the current top four banks have 45 percent of the deposits.

"After we looked at it, we decided there was too great a corporate risk for Dominion," Dalhouse said.