Harvard Weighs Bid for N.H. Banks
The investment company that oversees the $5 billion Harvard University endowment has confirmed interest in five failing New Hampshire banks and thrifts, signaling the entry of a respected maverick into an already crowded contest.
"They're very serious. And very respected," said Larry Connell, the chairman of New Hampshire Savings Bank Corp. in Concord, one of the companies expected to be sold by the Federal Deposit Insurance Corp.
Two banks and three thrifts are on the block: BankEast Corp., Amoskeag Bank Shares, Dartmouth Bancorp, New Hampshire Savings Bank Corp., and Numerica Financial Corp. Combined, they have about $5 billion in assets.
4 Out of 5 Insolvent
All the companies have been badly hit by the downswing in New England's real estate market. Only BankEast is still solvent, but it also has severe capital problems stemming from its real estate exposure.
The FDIC has been seeking a way to consolidate the assets of the companies, strip away the bad loans, and sell all or part to a bank or investment group. Current plans call for forming one bank from Dartmouth and Numerica in Manchester and New Hampshire Savings Bank in Concord and a second bank from BankEast and Amoskeag. These two units then could be sold off separately.
Harvard Management Corp., under its Aeneas Group investment affiliate, has participated in a bank rescue before. In 1989, Aeneas joined with DG Bankshares, Dallas, to purchase failed Texas American Bankshares, now a $5 billion company called Team Bank, with $5.6 billion of assets. Harvard has a 9.9% stake in the company.
Harvard Management told the Boston Globe last week that it would hire a team of managers to run the new bank that results from FDIC sale.
Interest Has Flagged
The entry of the group heats up a competition that has languished recently. One of the potential bidders, John Hancock Financial Services, has backed out of the competition. The company declined comment on its decision. John Hancock already owns a credit card bank in New Hampshire, First Signature Bank.
The deadline for bids is September 3.
Harvard Management Corp. has not indicated whether it is mulling a bid for all the banks or merely eyeing a deal for some of them.
Other Potential Bidders
Bank of Boston Corp., Fleet/Norstar Financial Group, and others are also considering bids for all of the banks or combinations of two or more.
Others in the picture are William Craig, a former executive of Shawmut National Corp. and Irving Bank Corp., who is expected to line up funding from the Kirby family, the principal owners of Alleghany Corp. Granite Partners, a local investment group founded by former executives of the Congoleum Corp., are also said to be interested in bidding.
Mr. Connell of New Hampshire Savings said he had met with representatives of Harvard Management. He felt that company's track record with Team Bank may have earned it a special place in the heart of regulators. Team Bank is privately owned and does not release earnings.
A bid for the entire group, "would be complicated: too many different philosophies, too many branches, altogether too much," said James Moynihan, an analyst for Advest in Boston.
He added that such a bid might face opposition from the Justice Department on antitrust grounds, because the winner would have a huge percentage of the state's market.