After spending almost two years on the dealmaking sidelines, Allfirst Financial Inc. in Baltimore is once again on the lookout for banks to buy in the Middle Atlantic states.
The $18 billion-asset company - until June known as First Maryland Bancorp - spent most of 1997 integrating Dauphin Deposit Corp. of Harrisburg, Pa., which it bought for $1.4 billion, and in 1998 consolidated its seven banks.
Allfirst, which is the U.S. subsidiary of Allied Irish Banks PLC of Dublin, this summer completed a $10 million renaming and renovation project at its 250 branches in four Middle Atlantic states and the District of Columbia.
In an interview this week, Susan C. Keating, president and chief executive officer of Allfirst, declared the merger integration and name change a success. Allfirst generates one-third of its parent company's earnings, and Allied Irish has given it the green light to pursue further growth, she said.
"We are looking to expand in contiguous markets and build our presence in some of the areas where we are already doing business," she said.
Specifically, she said her company would like to build on its position as the seventh-largest bank in metropolitan Washington, D.C., and to use the strong central Pennsylvania presence it acquired from Dauphin as a springboard to move eastward into Philadelphia and New Jersey.
Arnold Danielson, a Rockville, Md., investment banker, said the time might be right for Allfirst to strike. A year ago, when deal prices were sky-high, a package of cash and depositary receipts might not have been enough to compete with the domestic stock other buyers could use as deal currency.
"With bank stock prices now so low, suddenly getting foreign shares and cash is looking better and better," he said. "The players they are competing against for deals are down, so Allfirst is moving up in the pecking order."
Another investment banker, who asked not to be named, suggested that Allfirst could make a run at $9.4 billion-asset First Virginia Banks Inc. in Falls Church, one of the last large independents remaining in suburban Virginia. But "the day First Virginia goes on the blocks, there is going to be a bidding war for it, so that is no guarantee for Allfirst," he added.
Wachovia Corp. and BB&T Corp., two Winston-Salem, N.C.-based companies that have been actively buying banks in Virginia in recent years, are often rumored to have an interest in buying First Virginia.
"Whether we do one large transaction or several small ones is more a function of the markets and the opportunities than our preference," Ms. Keating said.
Until the right deal comes along, she said, Allfirst will be focused on internal growth. In addition to the new name and logo, the company has initiated a customer service training program, and it intends to roll out Internet banking and an on-line brokerage early in 2000.
"We have spent the last couple of years developing a strong platform," Ms. Keating said. "This is the year where we really experience the benefits of what we have developed."