A Pennsylvania thrift holding company is exiting the real estate development business in anticipation of a in-state merger with a commercial bank, analysts say.

First Harrisburg Bancor Inc. said it sold a 150-lot single-family home development, Greenwood Hills Land Development, for $250,000 during the third quarter.

First Harrisburg still has an interest in three Harrisburg-area single-family home developments, but vice president Michael S. Leonzo said the company expects to be out of those developments within two years.

The sale may be part of an effort to "facilitate a smooth merger" with a commercial bank, said Ronald R. Wetzel, assistant vice president of Legg Mason Wood Walker in Harrisburg.

In early September, First Harrisburg hired National Capital Companies, a Chevy Chase, Md.-based investment banking firm, after the company was contacted by several potential acquirers. The bank was engaged in discussions with one company, but delayed those talks while other suitors prepared offers.

"They are pretty serious about [seeking a merger], so I think they are trying to comply with commercial bank policies in preparation for a possible acquisition by a commercial bank," Mr. Wetzel said.

Unlike thrifts, commercial banks are barred from involvement in real estate developments.

"It could be a possible step to pretty themselves up," agreed Brian L. McShane, first vice president of Ryan Beck's Community Capital Group. "If one of your assets is going to be a detriment to your sale, it would make sense to sell it."

But company executives denied any connection.

"We decided about five years ago that that was not going to be the business that we were going to be in," agreed president and chief executive Robert H. Trewhella, adding that the company hasn't started any new ventures in five years.

First Harrisburg also announced third-quarter earnings of $825,800, up 37.2% from $601,800 in the same period of 1993.

Nine-month income was $2 million, down 31,8% from $3 million for the first nine months of 1993. The 1993 income includes $717,200 from an accounting change and $621,200 from a tax refund.

The $276.8-million-asset company also announced a quarterly cash dividend of 10 cents, payable Nov. 15, to shareholders of Nov. 1.

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