Magazine article American Banker

Stocks: First Virginia Surges on SunTrust-Crestar Deal

Magazine article American Banker

Stocks: First Virginia Surges on SunTrust-Crestar Deal

Article excerpt

Shares of First Virginia Banks Inc. jumped 6% Monday as investors bid up what will soon be Virginia's largest independent banking company.

First Virginia was the center of attention after SunTrust Banks Inc., Atlanta, announced a $9.5 billion deal to acquire Crestar Financial Corp., Richmond, Va.

The deal leaves First Virginia as the "only meaningful franchise in Virginia," said analyst David C. Stumpf of A.G. Edwards. And a ripe target for acquisition.

"They have missed earnings estimates a few times," said Michael L. Mayo of Credit Suisse First Boston. "And you do not have the luxury of doing that for very long in a consolidating industry. Investors believe there will be a domino effect given the announced merger between SunTrust and Crestar."

Shortly after SunTrust's deal with Crestar was unveiled Monday, rumors circulated about a potential pairing of BB&T and First Virginia, Falls Church.

The speculation sent shares of $9 billion-asset First Virginia rocketing upward by as much as 6.45%, while other bank stocks languished with the general market. Its stock closed Monday at $57.875, up $3.625.

The Standard & Poor's bank index fell 0.72%, while the Dow Jones industrial average dropped 0.45%. The Nasdaq bank index rose 0.57%, and the S&P 500 climbed 0.22%.

Officials at First Virginia could not be reached for comment. Robert Denham, a BB&T spokesperson, declined to talk about merger rumors, but said that his company's strategy is to buy companies in Virginia, Tennessee, Alabama, or Georgia that have assets of $250 million to $10 billion. …

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