First Maryland Bancorp injected a tantalizing element of intrigue this week into the quickening pace of the matching game being played by banks in the mid-Atlantic region.
On Tuesday, First Maryland announced that it has been exploring opportunities made possible by recently enacted regional reciprocal-banking legislation. As Union Trust Bancorp, another Baltimore bank company, had done just a few days earlier, First Maryland limited its disclosure to stating that it's considering an affiliation with other bank holding companies in the region.
But First Maryland's cryptic two-paragraph statement may be less a mystery than it seems.
A careful reading of the statement suggests a possible affiliation between First Maryland and United Virginia Bankshares Inc. of Richmond. Indeed, First Maryland and UVB are discussing a proposal to merge, according to reliable sources in Maryland's banking industry.
Officials of both bank holding companies have refused either to confirm or deny that they are discussing a merger, however.
"We don't respond to rumors," a spokesman for UVB said initially when asked about a linkup with First Maryland. "It's not our policy to comment on statements that other companies make with regard to merger negotiations."
When pressed to confirm or deny that UVB and First Maryland are discussing a merger, the UVB spokesman replied, "I don't know."
"We are making no further comment on our statement," said Carroll Jackson, a senior vice president at First Maryland. "This neither confirms nor denies anything," Jackson added.
"Nothing is settled yet, but they're talking," said an industry source who asked that his name be withheld.
Aside from the fact that industry sources have identified UVB as the participant in talks with First Maryland, this much is known:
First Maryland said its discussions could lead to an affiliation with a larger bank holding company in the region. That could mean only four bank companies, given the provisions of Maryland's regional reciprocal interstate-banking law. Only Sovran Financial Corp. of Norfolk, with assets of $8.3 billion; UVB ($6.5 billion); Maryland National Corp. ($6.8 billion) and Riggs National Corp. ($5.1 billion) have more assets than First Maryland.
Under the Maryland law, which became effective July 1, only bank holding companies from Delaware, Virginia, West Virginia and the District may acquire a Maryland bank before July 1, 1987. After that date, bank holding companies in 10 other states comprising a Southeast banking region will be permitted to acquire or merge with an institution in Maryland, provided Maryland bank companies are accorded the same privileges in those states.
Meanwhile, of all the states that are contiguous to Maryland, only Virginia has enacted reciprocal banking legislation. Neither Delaware, West Virginia, Pennsylvania nor the District has passed a regional interstate-banking bill. Even though a bill is pending in the District, Riggs is known to have no interest in an immediate interstate merger.
Sovran, the largest bank company in the D.C.-Maryland-Virginia triad, only recently announced plans to acquire D.C. National Bancorp, bypassing Maryland, for the time being, in favor of a deal with a smaller institution with assets of less than $1 billion.
That leaves UVB as the only other larger bank holding company that is eligible to affiliate with a Maryland banking firm.
UVB officials have made no secret that Maryland figures prominently in UVB's interstate banking strategy, which began to unfold in March when the Virginia company agreed to acquire the District's NS&T Bankshares Inc.
Maryland is "the natural leg of a three-legged stool," Joseph A. Jennings, UVB's chairman and chief executive officer declared at a press conference that was held to announce the agreement with NS&T Bankshares.
A source close to First Maryland declined to name UVB as a potential merger partner but suggested, "This [merger] will be an unusual one."
To be sure, an agreement between First Maryland and UVB would be unusual in that it would herald the first interstate affiliation linking three bank companies in the mid-Atlantic. The combination would make UVB the biggest bank company in this region, with assets of more than $11 billion.
The obvious question is, how would Allied Irish Banks figure in the merger if it comes about? The Dublin bank holds a 45 percent interest in First Maryland. Robert G. Wood, general partner and research director at Baker, Watts & Co., expects Allied Irish to retain its position as a major stockholder, but at a substantially lower level than its 45 percent share of First Maryland.
The answer should be forthcoming shortly, but keep in mind this caveat from First Maryland, which cautions that it "cannot predict whether such negotiations will result in a proposed affiliation."