Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, January 9, 1994 TAG: 9401040335
SECTION: BUSINESS PAGE: F3 EDITION: METRO
SOURCE: Mag Poff Staff Writer
DATELINE: LENGTH: Medium
Banking consultant Arnold Danielson expects First Union National Bank to "fill in the holes" through acquisitions in its Virginia-Maryland franchise, which is based in Roanoke.
Danielson, owner of Danielson Associates Inc. of Rockville, Md., said one of the unknowns is whether First Union will gain significantly on its arch rival, NationsBank Corp., the region's largest financial institution. It's a near certainty, the consultant said, that the two banks, both based in Charlotte, N.C., will gain in size along with the smaller and mid-size banks, while the market share of thrifts shrinks to single digits.
He views as acquisition targets several banks in Maryland and some smaller banks and thrifts in eastern Virginia.
"Also vulnerable are Crestar and Signet, if only because of franchise appeal and widely distributed stock ownership," Danielson said.
First Union, he predicted, will be "first and foremost among the acquirers" as it tries to complete its regional coverage. It will fill in its franchise primarily in Northern Virginia and Maryland.
North Carolina's Wachovia Bank, he said, "will be a focus of many rumors, but its entry, if it happens, will be driven by First Union and NationsBank.
"If a Crestar, Signet, Central Fidelity or First Virginia feel threatened by one of the North Carolina banks already present, they could seek out Wachovia to limit the negative impact of consolidation on their employees."
Further reductions in bank employment depend on merger patterns, he said, noting that the number of bank and thrift workers in Middle Atlantic states has fallen from about 84,000 to less than 75,000 since 1990. And this, he said, came despite minimal impact from the First Union and NationsBank acquisitions.
Henry Coffey Jr., industry analyst for J.C. Bradford & Co. in Nashville, Tenn., said smaller banks and thrifts are disappearing.
He is looking for some larger deals in the region, most likely in Virginia or Tennessee.
In general, Coffey said, community banks will see a lot more growth during this year than will their larger peers.
Locally managed banks are more responsive to customers, he said, so they are gaining an increasing share of deposits, provided they are well-run.
Loan growth is faster at the bigger banks, he said, but this is primarily through loans to corporations.
Guy Ford, banking analyst for Scott & Stringfellow Investment Corp. in Norfolk, said 1994 is "going to be more of what we had in 1993."
He sees positive growth in lending, although it will be slow. The quality of loans, he said, is no longer an issue with banks.
Earnings growth will be modest, he said, perhaps in the 6 percent to 12 percent range.
He predicted a "return to traditional banking" with slow but steady progress. Banking, Ford said, will operate this year in "a real modest type environment."
He believes there will be fewer acquisitions than most people think, because the stock prices of potential buyers are depressed.
An exception, he said, is First Union, which has a history of following one acquisition with others to boost its share of a new market.
Looming on the horizon, Ford said, is a move before the Virginia General Assembly to take Virginia out of the Southeast banking compact, an agreement that allows bank mergers across lines of certain adjacent states. If it should be approved, he said, Virginia banks could do business anywhere, not just the Southeastern states.
by CNB