Is Maryland headed for a wave of bank mergers?

In less than a week, three bank acquisitions, one involving the parent of Baltimore County Savings Bank, have been announced in the Mid-Atlantic region.

The burst of activity suggests the start of a long-anticipated wave of mergers.


"The industry has been anticipating a tipping point in regards to mergers and acquisitions," said Anita Newcomb, a Columbia-based banking consultant. "Still, it's difficult to say if this is the tipping point."

At the end of March, Maryland had 77 banks, and only 14 had assets of at least $500 million, a size that many banking experts say is needed to thrive in a climate with increasing regulation and stiff competition. Some even say banks need $1 billion in assets. But mergers haven't been fast and furious.


Conditions may be changing.

"The timing is right in terms of expectations," Newcomb said.

Previously, the gap between what buyers were willing to pay and what sellers would accept was wide, she said.

That has narrowed. Sellers, faced with the increasing cost of regulatory compliance and technology, are more open to entertaining offers. Meanwhile, buyers are benefiting from the run-up in stock prices, boosting the value of the currency they typically use to buy another bank.

The latest deal in Maryland is a stock-swap transaction valued at about $79 million announced Friday. Pennsylvania-based F.N.B. Corp. is purchasing BCSB, parent of Baltimore County Savings Bank.

This deal, expected to close early next year, is the second for F.N.B. in Maryland. It entered the Maryland market with the purchase of Annapolis Bancorp in Anne Arundel County, a deal that closed in April.

Baltimore County Savings Bank has nearly $641 million in assets and 16 branches spread across Baltimore, Harford and Howard counties.

Based in Nottingham, the bank has gone through some tough times in recent years. It was placed under the supervision of federal regulators in 2005, a heightened scrutiny that was lifted in 2008. And in 2006, the bank lost $6.9 million in a check-kiting scheme by one of its commercial customers.


F.N.B. has $12.4 billion in assets and more than 250 branches in Ohio, Maryland, Pennsylvania and West Virginia.

Virginia-based banking consultant Bert Ely said F.N.B. likely was attracted to the $560 million in deposits that BCSB holds. And though BCSB is large enough to handle the increasing regulatory burden, its shareholders may see greater liquidity owning F.N.B shares and greater earnings growth prospects, he said.

Joseph J. Bouffard, BCSB's CEO, declined to comment on the acquisition, referring questions to F.N.B.

Vincent J. Delie Jr., CEO of F.N.B., was unavailable for comment Monday, but the company listed on its website the advantages it saw to the deal.

With the BCSB acquisition, the Pennsylvania company will jump to No. 10 in the Baltimore area in terms of deposits — all within a span of 12 months. F.N.B. said it's working toward a market leadership position in the Baltimore region.

Indeed, Stuart Greenberg, a banking consultant in Baltimore, said F.N.B. could make another acquisition in Maryland or the surrounding area in another year or so after absorbing BCSB.


Ultimately, Greenberg added, these acquisitions also make F.N.B. a more attractive target for an even larger institution.

The other two banking deals announced last week occurred in Virginia.

C&F; Financial Corp. plans to acquire Central Virginia Bankshares in a cash transaction worth about $855,000. C&F; also will repay $3.35 million in Troubled Asset Relief Program funds owed by Central Virginia to the U.S. Treasury. TARP was created during the 2008 financial crisis to provide capital to banks in exchange for dividend-paying shares.

And Union First Market Bankshares Corp. said it would acquire StellarOne Corp. in a stock deal worth about $445 million.

Greenberg expects more merger activity.

"We have been an over-banked country for decades," Greenberg said. About a decade ago, the country had as many as 14,000 banks, and now the number is about half that, he said.


Regulators, too, would like to see fewer institutions, rather than more start-ups at this time, he added.

"The regulators have more than enough on their hands," he said.