Grove Bank's stock has soared 63% in the last two months amid speculation that a big bank will buy the Brookline, Mass., institution.

Grove's stock climbed to $31.75 a share Tuesday, compared with $19 a share in late May.

"The bank is up for sale and they're looking for the highest bid," said Gerard Cassidy, an analyst with Hancock Institutional Equity Services.

Mr. Cassidy said he expects a deal by Labor Day, with the bank fetching more than $40a share, based on similar deals in the region over the last year. That's twice its book value of $19.48 per share.

Grove announced in late June it had hired an investment banking firm to analyze its future options, including possible sale. This spurred a flurry of rumors among analysts and the press that Grove was looking to sell.

Possible Offers

Grove president Thomas Venables said the bank is "looking at all strategic options," but refused to say whether Grove has received any offers. He said the bank prefers further growth, but "we're certainly not naive enough to stick our heads in the sand and ignore the other possibilities out there."

James Moynihan, a banking analyst with Advest Group, said Boston-based Shawmut National Corp. has expressed interest in the $458-million-asset bank. Other offers could come from Fleet Financial Group, Providence, R.I., Citizens Financial Group, Providence, or Bank of Boston, Mr. Moynihan said.

With Grove in "one of the best markets in Massachusetts," Mr. Moynihan noted it would be "attractive to somebody that wanted to round-out their franchise in Massachusetts."

Mr. Moynihan said he likes Grove because its nonperforming assets, have dropped from a high of 3.43% of assets to 1.39%.

Grove stayed out of the commercial real estate market that sapped many other institutions, he said. "They are a good earner and very conservatively run. They didn't go crazy like a lot of the other savings banks."

On Monday, Grove announced that it earned $728,000 in the second quarter, up from $661,000 a year ago. For the first six months of the year, the bank earned $1.4 million, compared with $1.3 million last year.

Total assets grew $68.5 million, or 17.6% in the last 12 months. Grove attributed the growth to increases of 15.9%, or $53 million, in retail deposits and $15 million in Federal Home Loan Bank borrowings.

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