Baltimore Bancorp talks with suitors

January 14, 1994|By Staff Report

After prodding from stock exchange officials, Baltimore Bancorp Inc. disclosed yesterday that it was in preliminary discussions with several banking companies about a possible sale.

The bank holding company said it had hired investment banker Alex. Brown & Sons Inc. to provide financial advice. Baltimore Bancorp, with $2.3 billion in assets and 42 branches, did not disclose the names of the suitors.

"We firmly believe that our progress and unique position in the Baltimore market continues to make us an attractive acquisition candidate," Edwin F. Hale Sr., chairman and chief executive said in a statement. "Our chief priority, however, continues to be enhancing our banking operations while maximizing the value of the company's shares."

The announcement from the Baltimore-based company, parent of the Bank of Baltimore, came just hours after it issued a statement saying it did not know the reason for the unusual activity in the company's stock.

Citing a headline that appeared on the Dow Jones News Service, it later issued a second statement denying it was in acquisition talks with Mellon Bank Corp. of Pittsburgh. Baltimore Bancorp said it did "not expect to receive a bid from Mellon Bank and is not in negotiations with Mellon Bank regarding a possible sale of the company."

The company made the announcement at the urging of the New York Stock Exchange, after takeover speculation drove its shares up as much as 16 percent yesterday in heavy trading. Baltimore Bancorp's shares rose as much as $2.25 a share before closing up $1.625 at $15.625 a share with almost 1.5 million shares changing hands.

But after the market closed, the company issued a third statement announcing it was indeed in talks with several banking companies.

Mr. Hale, in the statement, said there was no assurance a transaction would result. He said the company did not intend to make any further announcements regarding a possible sale of the company unless an agreement was reached.

The company is trading at about 1.6 times the Sept. 30, 1993, book value of $9.67, compared with a typical sale value of two times book value.

Baltimore Bancorp has long been known as a likely takeover candidate.

As recently as May, at the company's annual stockholder's meeting, Mr. Hale repeated his willingness to negotiate a sale of the company if the right offer came along.

In fact, Mr. Hale took over as chairman after a group of dissident shareholders successfully ousted the prior board in 1991 after the company's directors rejected a $17 a share takeover offer from First Maryland Bancorp. Mr. Hale said at the time that his group was receptive to selling the company at the appropriate time and price.

After taking control of Baltimore Bancorp, the company's new management under Mr. Hale took steps to clean the books of mounting troubled real estate loans. Their moves led to a whopping loss of $126.5 million in 1991.

Recently, however, the company has reported a series of profitable quarters.

As a result, the company has said it would emerge from a cease and desist order imposed in 1992 by federal regulators and announced two months ago it was reinstating its quarterly dividend.

"This management team has been in place for two years. The previous board of directors lost its job because the stockholders were disappointed that management would not sell the bank," said David Spilman, treasurer and director of investor relations for Baltimore Bancorp.

L "The time has come to deal with it and we're addressing it."

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