Carroll bank buys Sterling Mason-Dixon increases Central Md. strength with Baltimore bank

Acquisitions

October 17, 1998|By Kristine Henry | Kristine Henry,SUN STAFF

Expanding its base in Central Maryland, Mason-Dixon Bancshares Inc. of Westminster said yesterday that it will acquire Sterling Bancorp, the parent company of Sterling Bank and Trust Co., for $10.3 million in cash.

Sterling, a Baltimore bank with four branches and $70 million in assets, will be merged into Mason-Dixon's Bank of Maryland subsidiary.

Sterling's Pikesville and downtown Baltimore branches will be closed, but the Timonium and Annapolis branches will be retained. Mason-Dixon expects the consolidation to bring savings of about $2 million, or 66 percent of Sterling's 1998 projected general and administrative expenses.

In March, Mason-Dixon agreed to sell five of its Eastern Shore Bank of Maryland branches to First Virginia Banks Inc. to limit its geographic spread.

"We felt that was a market we would not do well in, and we wanted to focus our attention on our core market of Central Maryland," Mason-Dixon's president and chief executive, Thomas K. Ferguson, said yesterday. "Sterling fit into that because of its location of branches and consolidation that could take place."

Mason-Dixon also owns Carroll County Bank and Trust Co. and Rose Shanis Financial Services LLC, each of which has 12 branches. With the two Sterling locations, Bank of Maryland will have nine branches.

"The acquisition definitely makes sense for Mason-Dixon; it falls right in line with what its expansion strategy is," said Collyn Bement, a bank analyst at Ferris Baker Watts.

The consolidation will mean "considerable cost savings. Twenty to 30 percent cost savings is the average in consolidations, and this is almost 70 percent, and that's very substantial," he said.

Ferguson said Mason-Dixon will try to find positions in the organization for the 20 or so employees at the Baltimore and Pikesville branches.

He said it has not been decided whether Mark H. Anders, Sterling Bancorp's president and chief executive, will stay after the acquisition is completed.

`Sterling is excited about joining forces with Mason-Dixon," Anders said in a statement. "Mason-Dixon is a growing regional institution which can offer our customers expanded products, services and locations." He could not be reached for further comment.

Mason-Dixon has $1.1 billion in assets and approximately $200 million in deposits, Ferguson said. Sterling has about $65 million in deposits.

Sterling customers will have access to more services once the bank is folded into Bank of Maryland, Ferguson said.

"They will have a much broader menu of lending products, as well as trust services, investment management services and insurance," he said. Lending limits will rise from approximately $1 million to about $5 million.

Ferguson declined to discuss Sterling's financial position or its profitability. Mason-Dixon expects to take an after-tax charge of about $400,000 for acquisition and merger expenses during the fourth quarter.

Don Kauth, an analyst at BT Alex. Brown Inc., also said the deal makes sense.

"From a strategy standpoint, in general it's an attempt to take advantage of consolidation among bigger banks and serve small- and medium-sized businesses in Baltimore that may be under-served by bigger banks as they get even bigger," he said.

"This will create a franchise with all the products of a bigger bank but that is small enough to still give personal attention to businesses."

The acquisition, which is subject to regulatory approval, is expected to be completed by the end of the year, with consolidation in the first quarter of next year.

Mason-Dixon shares rose 25 cents yesterday to close at $26.75.

Pub Date: 10/17/98

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.