United Bankshares to buy rival US lender Cardinal Financial for $912 mn
20 August 2016
United Bankshares Inc yesterday struck a deal to buy rival lender Cardinal Financial Corp in a $912-million all-stock deal to consolidate its position in Virginia, Maryland and Washington, where the latter has a strong presence.
United Bankshares is offering to pay 0.71 shares for each share of Cardinal Financial.
The offer is 2.24 times Cardinal Financial's tangible book value as on 30 June.
Virginia-based Cardinal Financial is a financial services holding company operating 50 bank branches and mortgage offices in Virginia, Maryland and Washington.
"Cardinal is one of the most successful community banks in the country and has a significant presence in one of the best markets in the United States," said Richard Adams, CEO of United Bankshare.
"We reinforce our position as the largest locally headquartered community bank," he added.
Cardinal, which has assets worth $4.2 billion, and market cap of around $883 million, also operates George Mason Mortgage, a residential mortgage lending company based in Fairfax, Virginia.
United Bankshares, based in both Washington and West Virginia, is a $12.6-billion regional bank holding company providing commercial banking operations, credit card services, trust services, mortgage banking services, investment banking services, and investment advisory services.
Founded in 1839, United employs 1,700 people and has 129 offices in West Virginia, Ohio, Pennsylvania, Virginia, Maryland, and Washington DC.
United Bankshares said the deal will increase its assets to about $20 billion.
Bloomberg had earlier said that regional bank mergers have been accelerating as lenders look to sell or bulk up to counter challenges as a result of the 2008 financial crisis.
Low rates have squeezed the profitability of the industry's business model of collecting more interest from borrowers than they pay for deposits.