The new year is starting out with a bang for the local banking industry.
Richmond-based Union First Market Bank and its parent company on Jan. 1 completed the acquisition of Christiansburg-based StellarOne Bank. The deal creates the largest community bank headquartered in Virginia, with a combined $7 billion in assets and 133 branches that span from Richmond to Fredericksburg and Charlottesville to Roanoke, Blacksburg and Staunton.
Valued at about $445 million, the deal gives StellarOne shareholders 0.97 shares of Union common stock for each of their StellarOne shares.
The StellarOne brand will remain until May, when it will be phased out in favor of the Union flag. The combined company will keep its headquarters in downtown Richmond at 1051 E. Cary St. Union Chief Executive Billy Beale will continue at the helm of the combined firms.
Once all the back office and internal systems are integrated, as is expected by May, Beale will have a larger army of bankers to oversee, with a combined 1,500 employees.
“The most important thing is the communication I have to deliver as the leader – trying to have this new group of people fall in line, if you wish, and start marching in the same direction,” Beale said.
Thirteen branches between the two banks will be shuttered as a result of the combination, including two of StellarOne’s recently opened Richmond branches. The closures will contribute to $28 million in savings the banks expect as a result of the combination.
This marks Union’s first acquisition since it absorbed the former Richmond-based First Market Bank in 2010. The StellarOne deal is about twice the size of that deal in terms of assets.
The $7 billion asset mark is a level not seen at a Virginia community bank since the 1980s and ’90s, when such regional giants as Central Fidelity and Signet roamed the commonwealth before being gobbled up by what would become Wells Fargo, Bank of America and others.
Union’s nearest Virginia rivals in size Carter Bank & Trust in Martinsville, which has $4.62 billion in assets, and TowneBank in Hampton Roads, which has $4.57 billion in assets. Before the acquisition of StellarOne, Union had $4.04 billion in assets.
Beale said the deal with StellarOne was about driving new earnings for shareholders, in addition to gaining a larger geographical footprint.
“It should always be about shareholders, never just pins on a map,” Beale said.
The road to completion was not without at least one speed bump. Just days after the pending deal was announced, a swarm of class action lawyers reached out to StellarOne shareholders, resulting in a federal lawsuit filed in Richmond. The case, which involves both banks and a StellarOne shareholder filing on behalf of her fellow stockowners, is being settled.
With the deal done, Beale said Union can look toward growth, both internally and potentially by flexing its acquisition muscles once again.
Potential targets could include firms that can bring in what Beale called non-bank revenue, such as insurance companies and wealth management firms.
Targets still exist on the banking front as well, he said, including in Hampton Roads, Northern Virginia and elsewhere in Central Virginia.
“I don’t think consolidation in Virginia is over,” he said.
Union’s stock closed Thursday at $24.58 per share, down $0.23 per share.