THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Thursday, February 9, 1995 TAG: 9502090382
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Medium: 57 lines
Central Fidelity Banks Inc. has agreed to buy 14 Northern Virginia offices and $465 million of deposits from Household Bank, an Illinois-based thrift that is withdrawing from Virginia, Maryland and California.
Central Fidelity, the Richmond-based parent of Central Fidelity National Bank, said the acquisition will boost its share of bank deposits in Northern Virginia from slightly less than 7 percent to almost 10 percent.
Household's deposits are particularly attractive because half are in checking accounts and money-market checking accounts, which are less costly sources of bank funds than certificates of deposit, said Charles W. Tysinger, Central Fidelity's chief financial officer.
Also, few of Household's branch locations overlap with existing Central Fidelity offices in Northern Virginia, he said.
The transaction, which will provide Central Fidelity with about 50,000 accounts, still must be approved by banking regulators.
Household International Inc., parent of Household Bank, has a unit in Chesapeake that processes the General Motors-Household credit card. The operation, Household Credit Services, will not be affected by the retrenchment of its thrift subsidiary, said Howard J. Adamski, director of financial relations at Household International.
In addition to selling its Virginia branches and deposits, Household Bank has lined up buyers for its 24 branches and $1.1 billion of deposits in Maryland, and for 52 branches and $1.4 billion of deposits in California.
After the sales, the thrift will have $6 billion of deposits and 97 branches in Ohio and Illinois.
Household Bank, decided to sell its Virginia, Maryland and California branches and deposits as part of a companywide restructuring, Adamanski said.
``Our belief is that we have to got to be a low-cost producer to win,'' he said. ``We will concentrate on a few businesses with the greatest profit potential,'' including its credit-card operations.
In late 1994, Household closed its first-mortgage origination business and sold its securities-brokerage unit, Hamilton Investments in Chicago. More recently, it sold its Australian operations.
Central Fidelity, which expects to complete the transaction in early June, said it agreed to pay Household 8 percent, or about $37 million, for the deposits it is buying.
The transaction with Household is the latest example of a commercial bank gaining market share in Virginia by buying a thrift or thrift deposits.
Richmond-based Crestar Bank, which has purchased $4.8 billion of thrift deposits in Virginia and Washington since 1992, is scheduled to acquire TideMark Bank in Newport News next month. First Union National Bank of Virginia, a unit of Charlotte-based First Union Corp., has agreed to buy the parent of Ameribanc Savings Bank, an Annandale-based thrift with branches in Hampton Roads. by CNB