Mich. company to buy Capital Bankshares

March 17, 1993|By Ross Hetrick | Ross Hetrick,Staff Writer

A small Michigan bank holding company has signed a letter of intent to buy Capital Bankshares Inc., the Timonium-based parent of Capital Savings Bank FSB, for about $5.2 million in cash and stock.

Newberry Bancorp Inc. of Sault Ste. Marie, Mich., agreed to pay $15.88 per share in cash for the 290,000 fully diluted shares of Capital.

Capital shareholders would also receive one share of Newberry stock for each share of Capital stock they own. Based on a closing bid price of $2.25 for Newberry stock yesterday, that portion of the deal was worth $605,380.

The sale, which is subject to stockholder and regulatory approval, is expected to be completed in about six months.

In addition to its headquarters in Timonium, Capital Savings has three branches, on Light Street in Baltimore, in Pasadena and in Edgewater. The thrift has $60 million in assets and capital of $5.3 million.

Capital Savings converted from a mutual organization to a thinly traded stock company in 1989, with an initial selling price of $7 a share. The thrift has been profitable since June 1990 and expects income of about $540,000 in the fiscal year ending June 30, according to the company.

Operating as a subsidiary of Newberry, Capital Savings would retain its name and its president, Michael J. Glenn, who is also chairman of the thrift. "The only thing that will change is the ownership," Mr. Glenn said yesterday.

Newberry owns the Newberry State Bank, which has two offices in Northern Michigan. The bank holding company has assets of $50.3 million and capital of $2.7 million.

About 40 percent of the money for the purchase of Capital Savings is coming from a group of "prominent local investors in Baltimore" who are buying stock in Newberry, according to Stephen Lange Ranzini, president and chief executive of Newberry.

He declined to identify those investors, however, other than to say they were not associated with Capital.

The remaining 60 percent of the purchase price will be financed through borrowing, Mr. Ranzini said.

In November, Atlanfed Bancorp Inc. announced that it had signed a letter of intent to buy Capital Savings for $3.8 million. But that deal fell through in February for reasons that were not disclosed.

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