Shares of MNC Financial Inc. soared Wednesday on heavy volume amid rumors that a buyout could be near for the Baltimore banking company.
MNC, which has been hobbled by problem real estate loans, saw its stock jump $1, to $12, in afternoon turnover, with more than two million shares traded. It was the second most active banking issue, behind Citicorp, on the New York Stock Exchange.
The stock is ahead 11.7% so far in June and up 147% from its moribund yearend price of $4.875 a share.
Mentioned as possible buyers are five regional giants: First Union Corp., Charlotte, N.C.; First Fidelity Corp., Newark, N.J., CoreStates Financial Corp., Philadelphia; and PNC Financial Corp. and Mellon Bank Corp., both of Pittburgh.
"This is a case of where there's smoke, there's probably some fire," said Nancy A. Bush, regional banking analyst for Brown Brothers, Harriman & Co.
Analysts noted that the financial markets remain receptive to acquisition deals by banks. And in the case of MNC, its stratospheric level of problem loans is beginning to edge down.
Moreover, according to The Washington Post, MNC has retained the New York investment banking firm of Bear, Stearns & Co. to assess buyout offers. Neither MNC nor Bear Stearns responded to requests for comment.
Open to Reasonable Offers
Alfred A. Lerner, MNC chairman and chief executive officer, holds similar titles at MNBA Corp., the credit card banking company MNC spun off in 1990 as its financial woes deepened. He must relinquish one role this year and is expected to stay at MBNA.
Mr. Lerner, a major shareholder in the company, has told MNC shareholders since last year that he would seriously consider reasonable acquisition offers.
Analyst said any deal will likely involve a liquidating bank for MNC's problem loans, which were a staggering 15.56% of total loans and other real estate owned on March 31.
|Attraction Remains Strong'
"Despite its problems, MNC remains the top franchise in Maryland," said James H. Weber, banking analyst at Johnston, Lemon & Co., Washington. "And this is market whose attraction remains strong for any number of buyers."
According to Maryland banking statistics, MNC had 24% of the state's banking market at June 30, 1991, double the 12% share of the second place competitor, First Maryland Bancorp, which is owned by Allied Irish Banks, Dublin.
MNC also has the second largest banking operation in the District of Columbia and owns a thrift, Virginia Federal Savings, in Richmond, Va.
All five of the rumored suitors have expressed interest in entering the Baltimore-Washington area, but non would comment Wednesday on a possible deal.
Of the five, Mellon is relatively weakest in capital, but it has a small presence in Maryland now. It acquired Community Saving and Loan, Bethesda, in 1986 and converted it to Mellon Bank (Maryland), now based in Rockville.
Mellon was also a bidder last year for Perpetual Savings Bank, Vienna, Va., the largest Washington-area thrift. Perpetual was eventually sold to Crestar Financial Corp., Richmond.