After a spirited defense, a western Maryland thrift has succumbed to its largest shareholder's demand to explore selling the company.
First Financial Corporation of Western Maryland, a $322 million-asset thrift in Cumberland, said this week it had hired Alex. Brown & Sons Inc. of Baltimore to determine various strategic options for the company, including its "possible sale."
The thrift's stock price jumped 6% to $24.25 at the news.
The announcement came just three weeks after the thrift's largest investor, Seymour Holtzman of Boca Raton, Fla., urged the company in a filing to find a buyer. Mr. Holtzman also disclosed at the time that he had upped his holding to 8.15% of all outstanding shares, from 6.10%
"Seymour will withdraw that proposal, because he (Patrick J. Coyne, First Financial's chief executive) has done exactly what we asked him to do," said Charles Garcia, Mr. Holtzman's lawyer. "Which is a big move, because last year there was no way they would consider the sale of the bank - they wouldn't even talk about it."
William C. Marsh, the thrift's chief financial officer, however, denied there was any connection between Mr. Holtzman's recent actions and First Financial's decision to hire an investment bank.
"The board of directors is just exercising its fiduciary duty to maximize shareholder value," Mr. Marsh said. "There really has been no change."
But it was clear that the pressure from Mr. Holtzman, who was partially successful in a bitter proxy fight last year with the thrift, was felt by the board.
Mr. Coyne, the thrift's chief executive, personally contacted Mr. Holtzman to let him know First Financial was hiring Alex. Brown, Mr. Garcia said. Mr. Holtzman was not easy to reach - he was vacationing on a luxury liner off the coast of Italy when Mr. Coyne called, Mr. Garcia said. Mr. Coyne was not available for comment.
Arnold Danielson, president of Danielson Associates Inc. in Rockville, Md., a bank consulting firm, said the announcement could be just a prudent move to ascertain the thrift's market value, appeasing the Florida investor in the process.
"It doesn't automatically mean they're putting themselves up for sale," Mr. Danielson said. "They're just allowing an outsider to tell them their true value."
