With regulatory approvals in hand, Premier Financial Bancorp in Huntington, W.Va., is set to absorb and rebrand District-based Adams National Bank in April. The conversion comes more than two years after Premier Financial acquired Abigail Adams National Bancorp, the parent company of the troubled bank, for $10.9 million.
Under the terms of that deal, the buyer also picked up Richmond-based Consolidated Bank and Trust, one of five institutions, including West Virginia's Boone County Bank, First Central Bank and Traders Bank, it will merge to create Premier Bank. The new entity will have roughly $822.9 million in assets, $689.6 million in deposits and 23 locations.
Customers of Adams National received a letter announcing the conversion earlier this month, said Robert W. Walker, president and chief executive of Premier Financial. He noted that the banks will begin donning the Premier sign on April 11, with a full conversion of the operating systems slated for completion by September.
Walker will head up the new bank, but he said the company is still in the process of selecting the remaining officers. Executives from the five institutions are under consideration for the posts.
For now, the chief executive doesn't anticipate any layoffs as a result of the merger. If anything, he expects to add more staff as the suite of product offerings expands.
“Adams had not had a good program of retail loans, so we will have secondary mortgage and home equity loans,” Walker said. “We hope to move people over to those retail products, but probably we'll have to have some additional help as well.”
Pooling the resources of all five institutions, Walker said, will provide enough capital and liquidity to offset and work through the portfolio of troubled loans at Adams National. Asset quality at the institution, founded in 1978 as a women owned and operated bank, began deteriorating in early 2008 as a result of rising losses on commercial real estate loans.
Following a regulatory examination that spring, the Office of the Comptroller of the Currency ordered the bank to shore up its books. Within weeks of the order, Abigail Adams president and chief executive Jeanne Hubbard resigned.
West Virginia businessman Marshall Reynolds, who holds a majority stake in Abigail Adams and Premier Financial, injected $3.2 million into Adams National that November for the bank to meet the capital requirements laid out by the OCC. The bank soon thereafter began exploring the possibility of a merger.
Adams National is the fourth bank to be sold and converted in the Washington area since the onslaught of the recession. M&T Bank converted Provident Bank's 135 branches throughout the Baltimore-Washington corridor in 2009, while Capital One absorbed all 247 Chevy Chase Bank locations last September. Meanwhile, Wells Fargo is set to complete the rebranding of Wachovia later this year.
Given the troubles at Adams National, banking consultant Bert Ely considers the merger a necessity to ensure the health of the institution. He questions, however, whether Premier will be able to profitably operate what he sees as a disparate network of branches.
“This is both a challenge and an opportunity. . . . There is still a lot of room to grow in the markets they serve,” he said.
Walker noted that there are no immediate plans for expansion, as the company is reviewing the viability of its existing footprint. Were the right opportunity to come along, however, he said he would not rule it out.