Loyola Capital being courted

April 22, 1995|By David Conn | David Conn,Sun Staff Writer

Loyola Capital Corp., one of Baltimore's last independent financial companies of significant size, said yesterday it is in talks to be acquired by an unidentified suitor.

The announcement sent the company's stock soaring, capping a monthlong period of heavy speculation about a possible acquisition of Loyola, the parent of Loyola Federal Savings Bank.

After a brief halt in trading that followed the announcement, Loyola's stock gained $2.875 a share, or more than 10 percent yesterday, to close at $29.625. The volume was more than 15 times heavier than the 30-day average.

About 2:30 p.m., Loyola issued a statement "that the company has been conducting preliminary discussions with a view toward a possible affiliation.

"Agreement has not been reached on the financial and other terms of any affiliation, and no assurances can be made that an agreement can be reached," said the statement issued by Chairman and Chief Executive Officer Joseph W. Mosmiller.

Chief Financial Officer James A. McAveney said the company decided to issue the statement after two days of heavy trading volume. "We were getting strong rumors from various points" that Loyola was talking to a specific company, whose name Mr. McAveney would not reveal. He said the rumors were accurate.

"In order to protect yourself, you have to let the public know so that everybody is on the same footing," Mr. McAveney said.

Speculation among industry members and analysts focused on four companies, with the odds-on favorite being Richmond, Va.-based Crestar Financial Corp., a banking company with $14 billion in assets and subsidiaries in Virginia, Washington, D.C., and Maryland.

The company has been an active buyer in recent years, with 10 deals announced or completed last year alone. Crestar has good market share in the Maryland suburbs of Washington, several branches in Annapolis that it picked up by buying Annapolis Federal Savings Bank last year, and no presence in the Baltimore area.

Crestar officials did not return calls seeking comment.

Other candidates mentioned included First Union Corp., based in Charlotte, N.C.; and First Fidelity Bancorp., the New Jersey company that bought Baltimore Bancorp last year.

First Maryland Bancorp was mentioned, but discounted by some because of Loyola's aversion to all the layoffs that would be needed after an in-market merger.

First Maryland and First Fidelity officials would not comment on the rumor; First Union could not be reached late yesterday.

With 35 branches and $2.5 billion in assets, Loyola is one of only three remaining billion-dollar financial institutions with a significant presence in the Baltimore area. The others are Provident Bankshares Corp. and Mercantile Bankshares Corp., whose management is said to be firmly anti-takeover.

Loyola earned $4.1 million in the first quarter and $15 million last year. It has about 800 employees, most in the Baltimore metropolitan area.

As a savings bank, almost three-quarters of Loyola's loans are mortgages or mortgage-backed securities. "What you've got there is a very plain vanilla loan portfolio, and a good [geographic] diversification of very loyal depositors," said Thomas E. Hitselberger, of Professional Consulting Associates, a consulting, strategic planning and mergers and acquisitions firm Timonium.

"What these big guys want to do is get a good loan-to-deposit ratio so they can leverage their assets and go out and make more acquisitions," Mr. Hitselberger said.

Legg Mason analyst Janet McCabe wrote in a report last month that Loyola could be acquired for up to $35 a share, or more than $280 million.

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