First Maryland Bancorp's withdrawal of its bid for Baltimore Bancorp, the parent company of the Bank of Baltimore, did not shock investors and analysts.
"I don't think it comes as any great surprise," said David S. Penn, a bank analyst for Legg Mason Wood Walker, a Baltimore brokerage company. First Maryland's decision is understandable, he said, considering concerns about the current health of banking and weak commercial real estate loans.
Yesterday's announcement ended a 6-month effort by Maryland's second largest bank to buy the state's fifth largest bank. In the end, First Maryland, the parent company of First National Bank of Maryland, said that Baltimore Bancorp's stock had sunk to such a level that its cash offer of $17 a share was no longer "appropriate."
Baltimore Bancorp stock yesterday dropped 62 1/2 cents a share, closing at $5.12 1/2 . By midday today, the stock had gained 1/4 trading at 5.37 1/2 .
"I'm disappointed, I guess, along with everyone else," said Joseph A. Esposito, vice president in the Baltimore office of PaineWebber Inc. He said it was "hard to understand" why Baltimore Bancorp did not take the offer, particularly given its stock price. "It's hard to explain to clients," Esposito added.
When First Maryland first made its offer on April 27, Baltimore Bancorp stock had been trading at $10.25 a share. The $217 million purchase had been conditioned on examination of Baltimore Bancorp's financial records by First Maryland, which is owned by Allied Irish Banks PLC of Dublin.
In a release, Jeremiah E. Casey, chairman of First Maryland, said the bank holding company withdrew the offer because of the worsening market for bank stocks in the last six months.
Despite dropping the offer, First Maryland remains open to exploring a merger with Baltimore Bancorp, the release said.
A spokesman for another disappointed shareholder, T. Rowe Price Associates Inc., said it was pleased with First's Maryland position of remaining open to further discussions about a merger.
Price, a Baltimore mutual funds company, holds 9.4 percent of Baltimore Bancorp's stock. Price said it hopes Baltimore Bancorp's board of directors is sensitive to the frustrations of its shareholders given the recent decline in the bank's stock price and concerns over the deteriorating banking environment."
Baltimore Bancorp's board of directors on May 16 unanimously rejected the First Maryland offer, saying it was a bad time to sell a bank because of the depressed stock prices and that it would hurt the company's employees and the local community.