Provident Bankshares, a Baltimore community bank, is selling a significant chunk of new stock in itself to European investors.
Provident, with $1.8 billion of assets, is selling 550,000 shares of common stock to 35 institutional investors in Europe and the United Kingdom. The offering will amount to about 7.8% of Provident's 7,038,008 shares, more if overallotments are exercised.
Provident's stock has been trading in the mid-20s, closing on Monday at $24, meaning the offering will raise in the neighborhood of $13 million.
Peter Martin, chief financial officer of Provident, said that the bank had determined that an overseas placement would be easier than one in the United States. Fox, Pitt Kelton is managing it.
"With this relatively small amount of capital it's more efficient to do it this way," he said. "It amounts basically to a private placement."
Analysts said the bank has a moderately aggressive growth plan, and the offering would allow Provident to maintain its 7.8% core capital ratio.
"They're seeing very good loan growth in their marketplace," said Mary Quinn, who follows Provident for Keefe, Bruyette & Woods Inc. "In 1995 they will probably see low-double digit growth rates. And I think they'd like to preserve their capital during that growth."
Ms. Quinn said the company plans to leverage the new capital by investing in higher-yield securities funded with brokered deposits for now, with plans to deploy the assets in loans in coming years.
While Provident has grown relatively little in recent years, it did begin to give up its historically high liquidity position in 1992 by doing more consumer lending and by buying mortgage banking assets.
For instance, while its assets have grown by only $270 million since 1991, its loans exploded from $700 million to $1.1 billion in the second quarter.
Although showing no signs of seeking a partner, the company is widely believed to be an attractive acquisition target. A lackluster earner in recent years -- it returned .65% on assets in the second quarter - the company is trading about 1.2 times book value.
"I think there's an acquisition premium already built into the stock," Ms. Quinn said, adding that it would fit well with New Jersey's First Fidelity.