And then there were two.
Loyola Capital Corp., the parent of Loyola Federal Savings Bank, yesterday signed an agreement to be sold to Crestar Financial Corp. of Richmond, Va., for $252 million, or $31 a share paid in Crestar stock.
The deal, which Loyola alluded to a week ago without naming the buyer, would leave only two independent Baltimore banks with more than $1 billion in assets: Mercantile Bankshares Corp. and Provident Bankshares Corp. It would follow a decade of acquisitions by out-of-state banking companies that has left Baltimore almost entirely a branch town.
Loyola and Crestar said they hope to have a definitive XTC agreement within two weeks. Assuming regulatory and shareholder approvals, the deal could be completed by the end of the year, or early next year.
"We believe this transaction will benefit all our constituents," said Joseph W. Mosmiller, Loyola's chairman and chief executive officer. "Crestar brings resources and services which enable us to more effectively compete with the larger institutions which have entered our market through merger and acquisition."
Crestar has $14.4 billion in assets and 349 banking offices in Virginia, Maryland and Washington, D.C. The company has substantial market share in the Maryland suburbs of Washington, but nothing at all in the Baltimore area.
Loyola said that was one of the reasons it was interested in being acquired by Crestar. While neither company made any assurances about layoffs, Crestar's Chairman and Chief Executive Officer, Richard G. Tilghman, noted there is little overlap between the two branch networks, and that "Crestar anticipated maintaining the Loyola branch network essentially intact."
"We look forward to bringing Loyola business and individual customers the same high level of service they currently enjoy," Mr. Tilghman said, "plus the benefits of Crestar's broad range of products and services, including the kinds of technology-based and investment-related services made possible by the resources a larger institution."
Founded in 1879 in the basement of the old St. Ignatius Loyola Church, Loyola Capital now has $2.5 billion in assets and 35 branches, mostly in central Maryland and some on the Eastern Shore.
Loyola also offers mortgage, mutual fund and credit card services to customers throughout the Southeast.
Recently, Loyola has advertised itself as a locally operated institution that "never forgets whose money it is." While that's true, James V. McAveney, Loyola's chief financial officer, said, "What are you going to do when someone approaches you? It's not ours to sell."
Loyola hired Alex. Brown Inc. as its investment adviser when Crestar first expressed its interest last fall. "There was only general interest expressed by others," Mr. McAveney said, "but enough interest that we should retain investment counsel."
"Personally, sure I'm sad," he added. "But then, it's the world you live in when you're a public company."
Loyola's stock in recent weeks has climbed steadily on speculation that it would be acquired. Last Friday Loyola issued a statement "that the company has been conducting preliminary discussions with a view toward a possible affiliation."
The statement did not name a suitor, but industry speculation had Crestar in the lead. After that announcement, Loyola's stock gained $2.875 a share, or more than 10 percent, to close at $29.625. It rose further this week to a high of $32. But yesterday, apparently reflecting some disappointment with the acquisition price, the market drove Loyola's shares down $3.50, to close at $28.625.
Crestar's stock also fell yesterday, dropping 50 cents to close at $45.
At $31 a share, the Crestar offer represents about 1.45 times Loyola's book value of $21.25 a share. At about 15.4 times its estimated annual earnings, the offer is on the high side for savings banks, analysts said.
As long as Crestar trades between $43.50 and $46.375 when the merger is completed, Loyola shareholders will receive 0.69 shares of Crestar stock for each of their shares. If Crestar falls out of that range, the price would vary a bit to keep Loyola's payment between $30 and $32 a share.
"It's a fair price, although it's less than I or the market anticipated," said Ferris, Baker Watts Inc. analyst Alex Hart. "But because it is an out-of-market merger, there are not the level of synergies, cost-savings-wise . . . to justify a higher premium," he said, referring to the lack of extensive branch closings and layoffs needed.
"Had it been an in-market transaction, you might have gotten a higher price," Mr. Hart said.
David West, an analyst with Scott & Stringfellow in Richmond, said the Loyola takeover is "a logical deal for Crestar. The Baltimore area has been the glaring gap in the franchise for quite some time."
LOYOLA AT A GLANCE
CEO: Joseph W. Mosmiller
'94 net income: $15.0 million
Assets: $2.5 billion
Deposits: $1.5 billion
Loans: $2.0 billion
'94 return on assets: 0.60%
Stock symbol: LOYC
Shares outst.: 8.1 million
Stock price: $28.625
Quarterly dividend: $0.12
CRESTAR AT A GLANCE
Headquarters: Richmond, Va.
Employees: 6,700 (600 in Md.)
CEO: Richard G. Tilghman
'94 net income: $169.1 million
Assets: $14.4 billion
Deposits: $11.1 billion
Loans: $9.8 billion
'94 return on assets: 1.24%
Stock symbol: CF
Shares outst.: 37.3 million
Stock price: $45
Quarterly dividend: $0.45