Magazine article American Banker

Riggs Shares Benefit from Deals in D.C

Magazine article American Banker

Riggs Shares Benefit from Deals in D.C

Article excerpt

Shares of Riggs National Corp., the last major independent bank left in the nation's capital, have stirred to life.

Takeover speculation following a pair of major deals in the Washington metropolitan area has helped the stock set two 52-week highs this week. The stock retreated on Thursday, falling 62.5 cents to $11, but volume remained strong.

This is the first time in several years that Riggs' stock has traded consistently above its book value, which at yearend was $9.02 a share.

"It's all based on merger mania," said Vernon C. Plack, a bank analyst at Johnston, Lemon & Co., Washington.

New Players

Investors are appraising the value of Riggs' franchise in the wake of two developments: First Union Corp.'s agreement last week to purchase three area banks of First American Bank-shares Inc., and NationsBank Corp.'s decision last month to exercise its option to buy Baltimore-based MNC Financial Inc.

"There's some feeling that Riggs could fetch up to $20 a share," said Mr. Plack. That would be a not-unheard-of premium of 2.2 times Riggs' book value.

"They have a fine franchise, the last for a major bank here, and they have high-profile name recognition," he said. Riggs has long been the best-known bank in Washington.

The list of potential buyers, he said, includes Crestar Financial Corp. and Signet Banking Corp., both of Richmond, and Wachovia Corp. of Winston-Salem, N.C.

Earnings Problems

But the analyst himself thinks a more realistic takeover valuation is from 1. …

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