Pa. bank to buy 3 Baltimore thrifts

April 12, 1994|By David Conn | David Conn,Company reports Sun Staff Writer

Baltimore has a new billion-dollar bank: Susquehanna Bancshares Inc. of Lititz, Pa.

Yesterday the company, based just north of Lancaster, said it signed agreements to buy the parents of three Baltimore-area thrifts -- Atlantic Federal Savings Bank, Fairfax Savings FSB and Reisterstown Federal Savings Bank -- for a total of $103 million in stock and cash.

Along with the still-pending deal to buy the eight Allegany County branches of First Maryland Bancorp, the latest acquisitions would take Susquehanna to $2.9 billion in assets, assuming the deals are approved by stockholders and regulators. At the end of last year the company had $1.8 billion in assets.

"For a sleepy little bank located up here in the middle of nowhere, they really have made some aggressive acquisitions," said Douglas S. Thomas, vice president and research director at the Lancaster-based Emerald Investment Cos.

"I think they've spotted a couple of opportunities and a chance to grow in Maryland, and I wouldn't be surprised to see them do more acquisitions down there," Mr. Thomas said.

Under the deals announced yesterday, Susquehanna will:

* Acquire Atlanfed Bancorp Inc., parent of Atlantic Federal in Baltimore, for almost $30 million in stock. Atlanfed shareholders will receive 1.2 million shares of Susquehanna, which closed down 25 centsat $24.50 yesterday. The deal is worth just over $20 for each share of Atlanfed, which has 10 branches and $235 million in assets. Atlanfed's stock gained $1.50 yesterday, to close at $19.

* Buy Fairfax Financial Corp., parent of Baltimore-based Fairfax Savings, for approximately $55 million in cash. The closely held Fairfax has $385 million in assets and nine branches, including one each in Salisbury and Ocean City.

* Pay about $28 million in cash for Reisterstown Holdings Inc. The company, also closely held, has $257 million in assets and two offices, in Reisterstown and Eldersburg.

As with most of Susquehanna's acquisitions to date, the three Baltimore-area thrifts will remain autonomous, the company said. They're coming in under their own name, own operations, own management teams," said Susquehanna Vice President and Secretary Richard M. Cloney.

"We don't have any anticipation of losing people" through layoffs or attrition, Mr. Cloney said, although he added that some consolidation in the future can't be ruled out.

Susquehanna, only 13 years old, has grown steadily through conservative acquisitions in the mostly rural southern counties of Pennsylvania, analysts said. Last year it earned $21.7 million, or $2.14 a share, which amounted to a 1.26 percent return on average assets last year. That was well above the industry average of 1.0 percent.

The company's managers are "conservative, methodical growers," said analyst Richard S. Lawrence, of Janney Montgomery Scott in Philadelphia. "Their loan portfolio is of very high quality," he said, comprising mostly small business and consumer loans.

In 1989 Susquehanna became one of the first Pennsylvania banks to make an acquisition in Maryland, with its purchase of the Farmers & Merchants Bank and Trust in Hagerstown. In 1992 the company bought four Washington County branches and $32 million in deposits from Sovran Bank/Maryland. And last fall it agreed to take eight Allegany County locations off First Maryland Bancorp's hands, which will bring Susquehanna another $180 million in deposits if that deal closes this quarter, as expected.

Aside from the immediate rewards of the proposed acquisition, Atlanfed shareholders who hold their Susquehanna stock probably can expect another bonus, said Mr. Thomas, of Emerald Investment Cos.

"At some point along the way Susquehanna's going to get acquired," he predicted.


Susquehanna Bancshares Inc.

Headquarters: Lititz, Pa.

Employees: 804 full-time

252 part-time

Assets: $1.8 billion

Deposits: $1.5 billion

1993 Earnings: $21.7 million

1993 EPS: $2.14 a share

Shares outstanding: 10.1 million

Figures as of Dec. 31, 1993

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