Hale still looking for bank venture

August 17, 1994|By David Conn | David Conn,Sun Staff Writer

Edwin F. Hale Sr., the soon-to-be-ex-chairman of Baltimore Bancorp, definitely has his sights on another bank in town. He just can't have his first choice.

That choice was Bank Maryland Corp., the Towson-based company whose largest shareholder is its chairman, H. F. "Bert" Criste. Mr. Hale, whose bank is about to be acquired by a New Jersey-based company, said yesterday that his negotiations to buy out Mr. Criste's nearly 20 percent stake in Bank Maryland have fallen through.

Mr. Hale said he still would like to have a controlling interest in Bank Maryland, if not an actual management role. "But not under the circumstances we were talking about," he said, declining to elaborate.

In the meantime, he said, he is talking with several Baltimore-area banking companies in which he has invested in recent months. He didn't name those companies.

Mr. Hale's next venture has been the source of some speculation by bankers and other curious observers around town. Soon after Baltimore Bancorp, parent of the Bank of Baltimore, announced in March that it would be acquired by First Fidelity Bancorp of Lawrenceville, N.J., Mr. Hale said he planned to find another financial company to run.

Until 1991, when he led a shareholder coup against Baltimore Bancorp's prior management, Mr. Hale's business experience came from his trucking and barge companies.

Although he wasn't responsible for all the company's day-to-day banking decisions, he is credited with providing the leadership and hiring the right people to lead Baltimore Bancorp from a near-federal takeover back to reasonable health and into the arms of a strong buyer. The deal to sell the company, which has $3.5 billion in assets, to First Fidelity is expected to close this fall.

Yesterday, Mr. Hale said he had turned much of his attention to his core businesses, Port East Transfer Inc. and Hale Container Lines Inc.

Whichever banking company he ends up investing in, Mr. Hale said, he's not interested in a full-fledged management role, just a large ownership stake and a position on the board.

Apparently Mr. Hale's not-so-secret talks with Mr. Criste had become exaggerated among area investors interested in a planned takeover attempt. Bank Maryland's stock has risen substantially in the past several months.

"The price has run up well in advance of the actual news, and it's been trading as if the deal had been done," said one Baltimore stockbroker who has followed the Bank Maryland situation.

Indeed, the company's stock gained more than 25 percent during the past two months. It is up roughly 100 percent since the start of the year and was trading at a hefty 1.7 times its book value until yesterday, when word was getting around that a deal with Mr. Hale was not in the offing. Bank Maryland's stock fell $1.50 yesterday, to close at $12.75 a share.

"Obviously the rumors have been on the street that Ed was going to be involved with this bank," said Bank Maryland President and Chief Executive Officer David H. Schumpert. "And I guess there was some discussion with Bert Criste as to whether he would sell his shares."

Mr. Criste "has told a lot of people that he wasn't going to be involved full time with the bank," Mr. Schumpert added. "I think he's come to like it a lot more than he planned."

Mr. Criste was out of town yesterday and could not be reached for comment.

Mr. Schumpert said there are, aside from the rumor mill, legitimate reasons for the stock's gains.

"This bank has turned around," he said, referring to the losses and capital shortfalls that had hobbled the company until last year.

"We are making extremely good profits this year," said Mr. Schumpert, who took charge of Bank Maryland, parent of the Bank of Maryland, in late 1991. "It looks like we could double our profits" over last year.

In 1993, the company lost money in the first half, but it earned $733,000 for the full year. So far this year, earnings were $401,000 in the first half, which included a $253,000 charge for income tax purposes. Bank Maryland has $191 million in assets and 11 branches.

Bank analyst Alex Hart of Ferris Baker Watts Inc. had rated the stock a "buy" since April.

"I viewed it at the time as one of the last turnaround stories in town," he said. Giving the stock a strong boost was "a humongous insider purchase before the end of last year," he noted.

At that time, several directors made substantial purchases, even before federal regulators lifted the supervisory restrictions they had placed on the company. Mr. Criste has bought more than 30,000 shares in the past half-year, raising his stake to just over 404,000 shares, or about 20 percent of the company.

The company went public at $25 a share in 1987. But since much of Mr. Criste's purchases have been in the $3 to $7 range, he most likely stands in a profitable position now.

Still, Mr. Hale indicated that his discussions with Mr. Criste broke down over price. The company's stock sold Monday at a recent peak of 1.7 times book value, which is roughly the amount by which assets exceed liabilities. That was about 25 percent higher than the 1.3 or 1.4 times book value that Mr. Hart said is fair for a company like Bank Maryland. By yesterday, the stock had fallen back to 1.54 times book value.

Mr. Hart said the bank's management believes it is too early to sell out. Internal growth will make the company more valuable within three to five years than what a takeover would fetch today, he said.

Yesterday morning, he lowered his rating to a "hold," citing the sharp run-up in price. But the stock's fall by the end of the day might cause him to re-evaluate, he said.

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