A regional banking giant is ready to make its first splash in the Richmond market.
United Bank, out of West Virginia and Washington, D.C., has struck a deal to acquire Henrico-based Essex Bank and its parent company Community Bankers Trust.
The deal, valued at approximately $303 million, will combine Essex’s $1.7 billion in total assets with United’s $27 billion, as well as 24 Essex branches to add to United’s 223.
Growing via 32 acquisitions over the years, United and its parent company United Bankshares has spread its reach to Maryland, Washington, D.C., North Carolina, South Carolina, Georgia, Pennsylvania, West Virginia, Ohio and elsewhere in Virginia.
But the Richmond region has eluded it and Essex Bank CEO Rex Smith said the deal is fueled, in part, by the desire to fill that gap between United’s operations in the Mid-Atlantic and Southeast.
“If you look at the map, that was the hole,” Smith said in an interview Thursday afternoon.
At the helm of Essex since 2011, Smith will stay on with United once the deal closes as expected in the fourth quarter. He’ll serve as regional president overseeing all existing Essex operations. The Essex name will be eliminated in favor of the United Bank brand.
While Essex hadn’t been actively shopping itself around through investment bankers, Smith said he and the CBT board had been pondering the company’s future, particularly as it has successfully navigated the pandemic.
“As we got through the COVID crisis, the franchise is about as clean as any bank I’ve been in,” said Smith, a Richmond native who previously ran the former Bank of Richmond. “Credit quality is great, deposits are strong, and loans are growing at a good pace.”
Smith said they particularly were trying to wrap their heads around how to take Essex to the next level of growth and size in a time when the industry is evolving in an increasingly online world.
“You’re looking out at growing and thinking we’re going to have to invest a fair amount of money on the digital front and the cyber security front,” he said. “Without size and scale it’s difficult to do those types of things.”
The deal with United started with a phone call.
“We approached them. I called (United Chairman and CEO) Rick Adams and said ‘Hey, I’d like to just have the conversation. They were willing to have that conversation.”
Smith said all of Essex’s branches are expected to remain open as part of the deal, as there is little overlap between the geographies of the two sides. Of the 24 Essex branches, 18 are in Virginia spread from Richmond to the Northern Neck and out to Lynchburg. It also has six in Maryland and the D.C. suburbs.
Smith said the deal bodes well for the Richmond-area operations as it will allow his local staff to go after bigger loans with a larger legal lending limit based on United’s much larger size.
United will acquire 100 percent of CBT’s stock in exchange for 0.31 shares of United stock. United shares closed Thursday at $39.03 per share. CBT shares closed at $11.90 per share, spiking nearly 30 percent when the deal was announced.
Essex and CBT were represented in the deal by financial adviser Piper Sandler and legal counsel Williams Mullen. United was represented by Performance Trust Capital Partners and law firm Bowles Rice.