Madison National Bank and United National Bank of Washington said yesterday that their parent companies have agreed to merge, but UNB will continue to operate independently as one of only two black-controlled banks based in the District.

Under the agreement, UNB, founded 21 years ago to serve the District's black community, will become part of James Madison Ltd., parent company of Madison National.

UNB will retain separate operations and a separate board of directors, but will have access to a larger capital pool as a subsidiary of James Madison Ltd., said Samuel L. Foggie, who will continue as president of UNB.

The merger will enable UNB to expand the number and size of loans to the local minority community, and UNB will continue to make a "special effort" to lend to blacks, women and other disadvantaged groups, Foggie said.

UNB's parent company, UNB Bancshares Inc., reported total consolidated assets of $71.5 million and total deposits of $66.3 million as of June 30.

Madison National Bank, the principal subsidiary of James Madison Ltd., is the city's seventh-largest bank. The parent company reported total consolidated assets of $310.8 million and total deposits of $252.4 million. James Madison also has signed letters of intent to acquire the McLean Bank and First Continental Bank of Maryland.

"This merger is not only an excellent combination of resources and assets, but a perfect match of philosophies," said K. Donald Menefee, chairman of James Madison Ltd.

"United National Bank will be able to add customer services, benefit from Madison's technological capabilities and take advantage of a larger asset base to support loans in the community. Madison, for its part, acquires a dynamic new partner who shares our commitment to giving the whole Washington community the best possible banking service," he said.

Under terms of the agreement, one share of James Madison Ltd. stock will be exchanged for every two shares of UNB Bancshares Inc. Blacks and other members of minority groups own a majority of UNB's 305,000 outstanding shares and are represented by a majority of UNB's board of directors, Foggie said.

Although UNB will be a subsidiary of James Madison, "from a management standpoint, there still remain two black-controlled banks" in the District, Foggie said.

The city's oldest and largest black-controlled bank is the 51-year-old Industrial Bank of Washington.

UNB is one of several community banks created to serve specific minority groups, which traditionally confronted barriers to borrowing from larger banks.

But as many of those obstacles have fallen away, these so-called "minority banks" have begun expanding their programs beyond their original constituencies of blacks, women, Hispanics and other economically disadvantaged groups.

Minority banks are competing more directly with local mainstream banks for customers at a time when banking deregulation has allowed greater competition from banks based outside the local area.

Like other small banks, minority banks are turning to mergers as a way of expanding their resources to become more competitive.

"We need to expand our services to the minority community, and this is the only way to do it," Foggie said. "We need more capital to make the size loans that are needed in the community. The way to do that is to grow. The way to grow is through merger."