The out-of-state parent company of Consolidated Bank and Trust Co. said Thursday that it has received regulatory approval to merge the Richmond-based entity with four subsidiaries to form Premier Bank.
Premier Financial Bancorp Inc., the Huntington, W.Va.-based parent company, said the merger of five of its eight subsidiary banks was necessary to get beyond problem loans at Consolidated Bank and its sister bank, Adams National Bank.
The merger is expected to take place in the second quarter and the name will change at that time, said Brien Chase, chief financial officer of Premier Financial.
The newly created Premier Bank will be based in Huntington, W.Va.
The Richmond bank will be called Premier Bank, The Consolidated Division, for local advertising and identifying purposes, Chase said.
Consolidated Bank was once the nation's oldest black-owned bank in continuous operation, but it lost that claim when it was acquired in 2005 by Abigail Adams National Bancorp, the parent company of Adams National Bank in Washington.
Consolidated Bank and Adams National are under written agreement with regulators to improve their financial conditions.
Premier Bank will have total assets of $822.9 million, total deposits of $689.7 million and liquid assets of $101.5 million.
"We believe these levels of capital and liquidity will provide the financial strength needed to work through the list of troubled loans at Adams National and Consolidated Bank in the time frame needed to optimize their resolution to enhance the earnings of the company and protect the capital of the bank," the bank said in a statement.
Consolidated Bank's written agreement with regulators dates back to 2000. Adams National went under its agreement in 2008. They became part of Premier Financial in October 2009.
"In the current extended economic downturn, it became clear to management that continuing to operate Adams National Bank or Consolidated Bank and Trust as independently chartered banks for the extended period of time required to address the items in their respective regulatory agreements ran the risk of overtaxing the resources of the company," President and CEO Robert W. Walker said in the statement.
By combining the five banks, Premier is expected to shed the regulatory agreements, Walker said.
"None of the regulatory approvals for the formation of Premier Bank contained any extra provisions restricting its operations other than normal banking law," he said.
Kent Engelke, chief economic strategist at Capitol Securities Management in Henrico County, said the merger was expected.
"This is the next phase of the community bank healing process," Engelke said. "The regulatory entities are permitting weaker banks to be folded into the arms of a stronger suitor regardless of any potential political or historical ramifications as it may be the case with both Abigail Adams — initially chartered to cater to women and minorities — and Consolidated Trust."
Other banking subsidiaries that will be merged to create Premier Bank are Boone County Bank in Madison, W.Va.; First Central Bank in Philippi, W.Va., and Traders Bank Inc. in Ravenswood, W.Va.
Regulatory approvals were needed from the Federal Deposit Insurance Corp., the West Virginia Board of Banking and Financial Institutions, the Virginia State Corporation Commission's Bureau of Financial Institutions, the District of Columbia Department of Insurance Securities and Banking and the Maryland Commission of Financial Regulation.
Premier Financial reported record annual profits in 2010. It realized net income of $9.2 million last year, up from $9.1 million in 2009, the previous annual record.
It also saw improvements in revenue, but those were offset by increases in operating expenses and provisions for loan losses associated with Consolidated Bank and Adams National Bank.