THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Wednesday, September 21, 1994 TAG: 9409210394
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: BY TOM SHEAN, STAFF WRITER
LENGTH: Medium: 70 lines
Crestar Financial Corp., which has steadily expanded its operations by purchasing thrifts in Virginia and Maryland, is paying $38 million to buy TideMark Bancorp Inc., a thrift holding company in Newport News.
Crestar, which expects to complete the acquisition in early 1995, announced Tuesday that it agreed to pay $5.50 in cash or Crestar stock for each of TideMark's 6.93 million shares.
The price is more than twice TideMark's book value of $18.64 million, or $2.69 per share, at the end of June.
``That's rich, but it's a reflection of the quality of (TideMark's) management and consumer base,'' said William K. Butler, president of Crestar Bank's eastern region. The acquisition, he said, ``gives us a chance to solidify our presence on the Peninsula.''
After acquiring TideMark, Richmond-based Crestar will have a 30 percent share of consumer deposits in that market, making it the leading bank, Butler said.
TideMark has 10 branches and $232 million of deposits. It is in the process of selling one branch, in Kilmarnock, and buying $74 million of deposits and eight branches from Bay Savings Bank, a Newport News thrift subsidiary of Detroit-based First Fed Michigan Corp.
So far this year, Crestar has acquired five thrifts in Virginia and Maryland with combined deposits of $1.7 billion.
Its merger discussions with TideMark began in mid-August after Crestar approached the Newport News institution, said Gordon Gentry Jr., TideMark's chairman. ``We had been in communication (with Crestar) and had held informal discussions with them over the last year or two,'' he said.
The transaction still must be approved by TideMark shareholders and by thrift regulators.
Organized in 1887, TideMark Bank had been known as Newport News Savings Bank until it adopted the TideMark name last year.
For TideMark, the merger agreement caps a prolonged struggle to shed nonperforming assets that threatened the thrift's viability during the 1980s.
The company's nonperforming assets at the end of June stood at $13.67 million, or 3.5 percent of total assets. That was down from $20.89 million, or 5.5 percent of total assets, one year earlier.
TideMark also had to contend with a severe erosion of its capital and sanctions from regulators for some of its business practices.
In 1989, Virginia's Bureau of Financial Institutions issued a cease-and-desist order against TideMark after determining that some of its officers had engaged in unsound banking practices. Some of the unsound practices involved conflicts of interest, the Bureau of Financial Institutions determined.
Gentry, previously a senior vice president of Signet Bank, joined TideMark in 1989 as president and directed efforts to restore capital and bolster shareholder confidence.
In the face of mounting pressure from regulators, TideMark raised $5.2 million of badly needed capital in 1992 and eventually complied with its capital requirements.
For the fiscal year ended June 30, TideMark earned $1.33 million, or 19 cents a share.
That was only half the $2.62 million, or 38 cents a share, that TideMark earned in the previous year, but most of its fiscal 1993 net income came from a one-time gain on an accounting change.
The company's annual meeting is scheduled for Oct. 27, but the merger agreement probably won't be put to a shareholder vote until later in the year, Gentry said.
TideMark has 130 employees and about 1,600 shareholders. by CNB