United Bankshares said Thursday it had agreed to acquire rival lender Cardinal Financial for $912 million in a move to increase its business in the Washington, D.C. , area.
The deal values Cardinal shares at $27.63, a 7.2% premium over the closing price on Tuesday before a potential merger was publicized. In trading Thursday, the stock rose 2.6% to $26.51.
Cardinal has $4.2 billion in assets and 30 branches throughout Virginia, Maryland and Washington, D.C. Its acquisition of George Mason Bank’s mortgage business in 2004 made it one of the largest mortgage lenders in the region.
According to The Washington Post, the combination of Cardinal and United Bankshares would create a regional giant with nearly $20 billion in assets and would be the seventh-largest bank serving the Washington area by deposits.
“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 U.S.A.,” United CEO Richard Adams said in a news release. “This merger aligns perfectly with our long-standing commitment to growth in the D.C. Metro area.”
“By uniting, we reinforce our position as the largest locally headquartered community bank,” he added.
After the merger, United would be the 32nd largest banking company in the country, with a projected market capitalization after the merger of about $3.9 billion based on its closing price on Tuesday. The purchase of Cardinal is its 10th acquisition in the Washington market.
Regional bank mergers have picked up following a drought in dealmaking after the 2008 financial crisis. “Lenders hope more scale will boost revenue and efficiencies in the wake of persistently low interest rates that have made their businesses less profitable,” Reuters said.
Adams began United as the Parkersburg National Bank in West Virginia in 1975. “It is among the largest publicly traded companies headquartered in that state, building a reputation as a ‘dividend aristocrat’ because of its repeated increase in payouts,” the Post noted.
Cardinal’s executive chairman, Bernard Clineburg, sold George Mason Bank to United in the 1990s before joining Cardinal. At that company, he later bought back George Mason’s mortgage unit.