Almost two years after acquiring the failed Bay National Bank from the federal government, a Lutherville company plans to leverage the bank’s brand in a $25 million deal with another Maryland bank holding company.
Privately-held Jefferson Bancorp, parent of the now-renamed Bay Bank, on Monday announced plans to pay shareholders of Carrollton Bancorp of Columbia, parent of Carrollton Bank, $15.4 million in stock, plus $9.1 million to the U.S. Treasury under its Troubled Asset Relief Program. If the deal passes regulatory and shareholder muster, Carrollton Bancorp will be the surviving holding company, while Bay Bank will be the surviving bank.
“We have invested a lot to build and market that brand,” said Kevin B. Cashen, president and CEO of Jefferson and Bay Bank. “We thought we could leverage that momentum over the last two years with this new entity.”
Carrollton Bancorp shares rose 22.7 percent on the news Monday.
Directors of both holding companies have approved the merger, and it is expected to close in the third quarter of 2012.
Bay Bank has two branch offices, in Lutherville and Salisbury; Carrollton has offices in Anne Arundel, Baltimore and Harford counties, plus Baltimore city.
The resultant company will have 12 bank branches in the Baltimore-Washington, D.C., market, with $472.3 million in assets, $412.9 million in deposits and $382.8 million in gross loans, according to company information. This the new company’s total work force would be about 170, with Jefferson trying to retain all of its 35 employees, Cashen said.
Carrollton Bancorp reported a profit last year of $547,000, versus a net loss of $946,000 in 2010. Assets during the year fell 5.6 percent to $364.8 million from $386.5 million.
Jefferson acquired Bay National Bank from federal banking regulators in July 2010.
Cashen said Jefferson’s main business plan has focused on acquisitions.
“Carrollton was a good fit for us since they have complementary services,” he said.
Robert A. Altieri, president and CEO of Carrollton, said one of the major draws behind the merger was uniting Jefferson’s capital with Carrollton’s size.
“It was a merger of equals,” he said.
Altieri would retain an executive role in the new Carrollton Bancorp, although he would no longer be CEO. He also would be executive vice president of Bay Bank.
“Bay Bank has made a strong push into the Maryland banking market over the past two years and we are very excited to join forces to further expand our market share,” he said in a statement.
The new Carrollton board would comprise six currentJefferson directors and three directors from the current Carrollton board.
“Carrollton Bank has done a wonderful job of serving the Baltimore market for over 100 years with a strong commitment to the community,” Cashen said in the statement. “Carrollton has a solid retail branch network, a successful mortgage operation, and an innovative mix of fee-based products.”
The announcement follows other recent bank deals.
Sandy Spring Bancorp of Olney, parent of Sandy Spring Bank, last month received regualtory approval to acquire CommerceFirst Bancorp of Annapolis for $25.4 million in stock and cash.
More recently, First Mariner Bancorp of Baltimore, parent of First Mariner Bank, acquired a 24.9 percent stake in Cecil Bancorp of Elkton, parent of Cecil Bank, according to a filing Friday with the Securities and Exchange Commission. Cecil had a market cap of $6.7 million on Monday, when its stock price rose 38.5 percent.
Also Monday, First Mariner clarified the deal.
“The shares were obtained through the collection process of a defaulted loan,” and First Mariner Bank “is not pursuing an acquisition of Cecil Bancorp,” the company said in a statement. First Mariner “has no intention of exercising its ownership position to influence Cecil Bancorp's board of directors or management in the performance of their responsibilities.
Cecil Bancorp also raised $2.5 million in a stock sale at the end of March, according to an SEC filing.