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Virginia Commerce Bancorp in Arlington is considering selling itself. The $3 billion-asset company said Monday its board would review various alternatives to increase shareholder value, including a possible sale.
January 14 -
Hanmi Financial announced Wednesday that it has hired an advisor to help it explore strategic alternatives. Observers say the recovered lender could be a hot ticket, fetching between $16 to $20 per share.
January 10
Another large community bank is eyeing an exit after a breakthrough year.
The announcement by Virginia Commerce Bancorp (VCBI)
The decisions show the temptation to sell for selective banks in the right markets — ones that are healthy enough to attract buyers, yet not so powerful that they are guaranteed to thrive. The calls are close ones to make.
The $3 billion-asset Virginia Commerce, of Arlington, spent 2012 escaping its troubles, largely related to construction lending, and
"You have a company that has made a lot of progress over the last few years," says Carter Bundy, an analyst at Stifel Nicolaus. "
The announcement Monday of Virginia Commerce's plans followed news that Hanmi, a $2.8 billion-asset company in Los Angeles that serves the Korean-American market, was
It was time well spent, analysts and investors say. As they were fixing themselves, potential buyers were getting stronger themselves. The banks could each command a market premium of about 160% of tangible book value, if not higher, analysts say.
"Maybe there is fatigue from the sellers' perspective," says Scott Cottrell, managing director of FJ Capital, a McLean, Va., hedge fund that has investments in Virginia Commerce and Hanmi. "But the result is more clarity on the condition of the targets. Meanwhile, buyers' currency is rising and so they are able to pay up."
Virginia Commerce declined to comment beyond the Monday press release.
The list of potential suitors for Virginia Commerce is likely a long one. The company is the largest community bank based in northern Virginia, a market that has been resilient throughout the downturn and, given its proximity to Washington, will likely remain strong.
"While bank acquisition multiples have been depressed over the past few years, institutions are sometimes willing to pay significant premiums for certain institutions in highly attractive markets," Jennifer Demba, an analyst with SunTrust Robinson Humphrey, said in a research note on Sunday. "In our view, there would be multiple Southeast and Mid-Atlantic-based regional and community banks very interested in this property,"
Bidders could include BB&T (BBT), PNC (PNC), M&T Bank (MTB), Fulton Financial (FULT), Susquehanna Bancshares (SUSQ), United Bankshares (UBSI), FNB Corp. (FNB) and Sandy Spring Bancorp (SASR), Demba said in her note. Several other analysts offered similar lists.
The likely buyer would have to be a bank with a highly valuable stock, given where Virginia Commerce was trading, even before the announcement, Bundy says. On Thursday the stock closed at $9.49; its tangible book value is $7.56. The stock finished Monday at $11.58.
Bundy added that the company's presence in Virginia also had "scarcity value" to an outsider, because there aren't a lot of large community banks available in that area. "There is enough size there to be a relevant player in the market," Bundy says. "To go into D.C., you need size."
Don't expect a slew of rebounding larger community banks to announce they are searching for buyers this year, Cottrell and Bundy say. Both companies announced their strategic searches following Bloomberg News stories that the moves were underway.
News reports