First Virginia Banks Inc., a multibank holding company in Falls Church, has signed an agreement in principle to acquire Commercial Bank of Bel Air, Md., through an exchange of stock worth more than $21 million.
The agreement, which officials of the two banking firms announced yesterday, is the fourth interstate merger pact to be signed by Virginia and Maryland institutions in the past six months. The first of those merger agreements was completed a week ago when Bank of Virginia Co. of Richmond took over Union Trust Bancorp of Baltimore.
The proposed merger between First Virginia Banks and Commercial Bank is subject to a definitive agreement and regulatory and shareholder approvals. The agreement in principle calls for shareholders of Commercial Bank to receive 5.93 shares of First Virginia Banks common stock for each share of Commercial Bank common. Based on the average closing price ($27.50) of First Virginia Banks stock in December, the transaction would have a market value of more than $21.4 million and represents about 2.5 times the book value of Commercial Bank's stock.
The agreement further provides for Commercial Bank to retain its name while operating as a member bank in the First Virginia group.
First Virginia Banks, which operates 18 wholly owned subsidiary banks in Virginia, is the state's oldest bank holding company and the sixth largest, with assets of more than $3 billion.
Commercial Bank, which has assets of about $121 million, operates nine offices in Harford County.