First Fidelity Bancorp to expand by acquiring Baltimore Bancorp

First Fidelity Bancorp to expand by acquiring Baltimore Bancorp

First Fidelity Bancorp (Lawrenceville, NJ) says it will acquire Baltimore Bancorp (Baltimore, MD) in a cash transaction at $20.75 per share, or $345.8 million for all of Baltimore’s 16.663 million common shares outstanding.

First Fidelity is paying a hefty premium (2.74 times book value) for Baltimore BancCorp in order to realize its strategy of expanding its franchise from Maryland to Massachusetts. “It gets them out of the New Jersey rut,” says Nancy A. Bush, a regional banking analyst with Brown Brothers Harriman & Co. New Jersey has been experiencing an economic downturn which has not been alleviated by the national economic recovery. A decline in real estate values started the downfall, and expected layoffs by AT&T may continue to cripple the state’s economy.

Baltimore Bancorp has been on the block for several months. The bank’s current chairman, Edwin F. Hale Sr., led a proxy fight in 1991 that resulted in the ouster of Baltimore Bancorp’s management, which had wanted to keep the bank independent. Mr. Hale won control of the bank by promising to restore its financial health (Baltimore Bancorp lost $127 million in 1991) with an eye to its eventual sale. Positive results in 1992, and an estimated profit in 1993, have re-established its attractiveness as a takeover target.

First Fidelity has been an active acquirer throughout its history. Its latest acquisiton agreement was in 1993, when it agreed to acqurie Greenwhich Financial for $41.9 million.

Copyright Quality Services Company Mar 28, 1994

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