after the Santa Monica, Calif., company that was supposed to buy it got cold feet.
Firstfed Financial Inc., a $3.6 billion-asset thrift company also based in Santa Monica, withdrew its merger offer Tuesday. Professional's stock fell more than 25% that day, to $14.50, as nearly four times the average volume of shares changed hands. The price was $15.875 at midday Wednesday.
Professional, which specializes in lending to doctors, dentists, and medical billing companies, has been under pressure from its major shareholders to sell for about a year.
Executives at Firstfed and Professional declined to say why discussions were called off, citing a confidentiality agreement. Firstfed's chief operating officer, Jim Giraldin, said there were "certain things that we wanted to get accomplished in the definitive agreement that we couldn't."
Analysts said that price and business practices were among the issues that scuttled the planned $50 million sale.
Firstfed had offered to pay Professional shareholders $23.50 per share in cash, according to a June 28 announcement. But Firstfed "couldn't justify the price after performing due diligence," said Charlotte Chamberlain, an analyst at Jeffries & Co. in Los Angeles who had been an early critic of the deal. Ms. Chamberlain has raised concerns about Professional's historically low return on equity and its deteriorating credit quality.
Hank Dahlgren of Torrey Pines Securities Inc. in Incline Village, Nev., said he "wasn't surprised the deal fell apart." Professional "hasn't exploited its niche," said Mr. Dahlgren, who has bought and sold shares of the company over the years.
Professional's president and chief executive officer, Melinda McIntyre-Kolpin, said she was "disappointed" that the negotiations fell through.
"We believed the deal would have been a great combination," Ms. McIntyre-Kolpin said. The board will pursue merging with another company, she said.
Firstfed had hoped the acquisition would step up its transformation into a more bank-like company.
Mr. Giraldin said that Firstfed, which formed a commercial business lending unit in 1996, would continue to seek small-bank deals.
Firstfed's stock rose 75 cents this week, to close at$16.9375 Wednesday.
