First Maryland Bancorp is bucking a trend-selling its underwriting subsidiary, Hopper Soliday & Co., just as other commercial banks scurry to buy securities firms.
Baltimore-based First Maryland said this week it has signed a letter of intent to sell Hopper to Freedom Securities Corp., Boston, for an undisclosed sum. The deal, which is subject to regulatory approval, is expected to close by Dec. 31.
First Maryland got Hopper when its parent company, Allied Irish Banks, bought Dauphin Deposit Corp. last year. Dauphin, the smallest independent banking company ever to have a section 20 subsidiary, owned Hopper.
But First Maryland executives decided that Hopper, which is based in Lancaster, Pa., was simply not the right fit.
"Hopper has established a nice niche for themselves, but it doesn't really match our footprint," said Reese A. Nank, First Maryland's vice president of communications.
Hopper concentrates on the Pennsylvania municipal bond market and a statewide retail brokerage business, though about five of its 62 employees are involved in underwriting equities for local businesses.
"We felt their business was too narrow, both geographically and in terms of the product mix," Ms. Nank said.
First Maryland, with $17.3 billion of assets, has a wider geographical base than Hopper, with operations in Pennsylvania, Maryland, Delaware, the District of Columbia, and northern Virginia.
Before the Dauphin deal, First Maryland had a municipal bond division and a retail brokerage, known as First Maryland Brokerage Corp. Both will be retained by the banking company.
Though the bank will lose its equity capabilities once the sale goes through, it may eventually buy an equity underwriting firm that better fits its geographic profile, Ms. Nank said.
"We would keep our eyes open for an opportunity to acquire a larger player in our marketplace, but we would not make that an immediate priority," she said.