Two local banks merge
Two bank companies with branches in Suffolk announced yesterday major mergers.
First up, Wachovia announced intentions to sell its retail bank, corporate and investment bank and wealth management businesses to Citigroup, according to a press release on the Wachovia Web site. Wachovia Corporation will remain a public company with two main operating subsidiaries: Wachovia Securities, the nation’s third largest brokerage firm, and Evergreen Asset Management, a leading provider of asset management services.
“During recent weeks, the financial landscape has changed significantly and presented us with unprecedented challenges,” said Robert K. Steel, CEO and President of Wachovia. “Today’s announcement is the best alternative for the company, enabling a resolution on the Golden West portfolio.”
Under terms of the transaction, Citigroup will pay $2.1 billion to Wachovia and assume the senior and subordinated debt of Wachovia Corporation.
The transaction is expected to close before year-end. It has been approved by directors of both companies and is subject to shareholder approval of Wachovia and the appropriate regulatory approvals.
Customers of both companies should continue banking as usual, and feel confident that their deposits are secure. Also, employees and vendors should continue to operate business as usual.
At this time, there are no changes to Wachovia’s board of directors and two Wachovia directors will join Citigroup’s board.
Wachovia Corp. will remain headquartered in Charlotte, NC. Wachovia Securities will continue to be headquartered in St. Louis, MO. Citigroup will headquarter the retail bank in Charlotte and the investment bank in New York.
Wachovia’s investment bankers were Goldman Sachs, Perella Weinberg Partners and Wachovia Securities, and its legal advisors are Sullivan & Cromwell and Simpson Thacher & Bartlett.
Then, The board of directors of Hampton Roads Bankshares and Gateway Financial Holdings each approved the execution of, and the parties have executed, a definitive agreement in which Gateway Financial Holdings will merge with and into Hampton Roads Bankshares.
Gateway Financial Holdings is the financial holding company for Gateway Bank & Trust Co., a regional community bank with a total of thirty-seven full-service financial centers. In Virginia, Gateway has twenty-one offices with seven in Virginia Beach, six in Richmond, three in Chesapeake, two in Emporia, and one in each of Suffolk, Norfolk and Charlottesville. In North Carolina, Gateway has sixteen offices with three in Raleigh, three in Elizabeth City, two in Kitty Hawk, and one in each of Chapel Hill, Edenton, Moyock, Nags Head, Plymouth, Roper, Wake Forest and Wilmington. The Bank provides insurance through its Gateway Insurance Services, Inc. subsidiary, brokerage services through its Gateway Investment Services, Inc. subsidiary, mortgage banking services through its Gateway Bank Mortgage Inc. subsidiary, and title insurance services through its Gateway Title Agency, Inc. subsidiary. As of June 30, 2008, Gateway Financial Holdings had total assets of $2.1 billion, total deposits of $1.6 billion, total loans of $1.8 billion, and total stockholders’ equity of $164 million.
The merger is anticipated to close in the fourth quarter of 2008 and is conditioned upon customary closing conditions, including receiving the requisite regulatory and stockholder approvals, and upon Gateway Financial Holdings raising approximately $30 million in additional capital. Pursuant to the terms of the merger agreement, Gateway Financial Holdings will merge with and into Hampton Roads Bankshares. Subsequent to the completion of the merger, Gateway Bank & Trust Co. will operate as a wholly owned subsidiary of Hampton Roads Bankshares. The companies anticipate that Gateway Bank & Trust Co.’s offices in Virginia Beach, Chesapeake, Norfolk and Suffolk, Virginia, will be converted to Bank of Hampton Roads locations with the additional consolidation of overlapping market locations. Gateway Bank & Trust Co.’s offices outside of South Hampton Roads will continue to operate as either Gateway Bank & Trust Co. locations or, as presently the case in Richmond, Virginia, as The Bank of Richmond.
Once the merger agreement is closed, Hampton Roads Bankshares will have combined assets of approximately $3 billion with its headquarters in Norfolk, Virginia, the largest financial center in Southeastern, Virginia.