Bay National plans IPO of up to $15 million

Start-up bank plans offices in Salisbury, Baltimore County

Banking

October 13, 1999|By Bill Atkinson | Bill Atkinson,SUN STAFF

A start-up banking company, headed by a former top executive of Mercantile Bankshares Corp., plans to raise as much as $15 million in an initial public offering.

Bay National Corp. plans to sell from 900,000 to 1.5 million shares to the public at $10 a share.

Hugh W. Mohler, a former executive vice president at Mercantile, who is president and chief executive officer of Bay National Corp., declined to comment because the company is in the Securities and Exchange Commission's "quiet period."

The offering could begin early next month, if Bay National receives approval from the SEC. It is expected to close Jan. 31, but could be extended to March 31, according to the company's prospectus filed with the SEC.

Bay National executives are not using an underwriter and will sell shares in the company themselves.

The company expects to open for business in March with an office in Baltimore County on Joppa Road, and another in Salisbury on the Eastern Shore.

Bay National's strategy is to tap small and medium-size businesses and wealthy individuals in Towson, Lutherville, Timonium, Hunt Valley, Ruxton and other areas north of the city.

"This is a busy commercial area with a stable population of over 125,000," the prospectus says.

"We estimate that this area is home to at least 5,000 businesses and over 80,000 employees."

It will also target Salisbury, which has about 3,200 businesses and more than 38,000 employees.

The company's subsidiary, Bay National Bank, will make commercial, industrial, real estate, consumer and residential mortgage loans. Business loans will make up about 80 percent of Bay National Bank's loan portfolio, according to the prospectus.

"Baltimore essentially just doesn't have much of this type of bank," said Arnold Danielson of Danielson Associates Inc., a Rockville-based bank-consulting firm. "If you are going to open a new bank, you have got to go after the small-business segment."

"I think there is a window of opportunity for a start-up" bank, said Collyn Bement Gilbert, a bank analyst at Baltimore-based Ferris, Baker Watts Inc.

Mohler, 54, will likely be able to attract customers because he is well known in banking circles here and on the Eastern Shore, Danielson said. He worked at Mercantile for 22 years, most recently as executive vice president in charge of 20 community banks in three states. Prior to that, he was president of Mercantile's Salisbury-based affiliate.

Joining Mohler is John S. DiPietro, 52, who is Bay National's treasurer and vice president of operations. From November 1995 to last June, DiPietro was senior vice president of bank operations at Mercantile-Safe Deposit & Trust Co. Before that, he was associated with Mercantile's Peninsula Bank from 1974 to November 1995.

Thomas M. Neale, 46, is Bay National's vice president of client services and senior lending officer. He has been in commercial banking for more than 20 years, most recently as a managing director of First Union Corp.'s private client group.

In addition, Kenneth H. Trout, 51, is a director of the company. Trout was president and chief executive of Signet Bank-Maryland. "They have a lot of past customers they can go call on," Danielson said. "The key to new banks is the well-connected board and a management that has strong lending skills. Being well up in the structure of Mercantile is a good starting place."

Pub Date: 10/13/99

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