A Rhode Island banking company is looking for new ways to enter Connecticut after a bank there twice rejected an unsolicited buyout offer.
The board of directors of $70 million-asset Bank of Mystic Inc. turned down Washington Trust Bancorp's offer earlier this month in favor of a previous merger agreement with $590 million-asset Norwich Financial Corp. Washington then withdrew its offer.
That leaves the Westerly, R.I.-based company searching for other opportunities to buy into the Nutmeg State, but president and chief executive Joseph J. Kirby admitted that at least for next year, the rejection "probably dampers plans."
"We would have preferred to have had a deposit structure and an asset structure from inception at what we felt was an attractive price," Mr. Kirby said. But "sooner or later we'll have an opportunity to do something, whether it's through acquisition" or interstate branching.
But First Albany Corp. bank analyst Tracey Stangle said it may not be that easy.
"They'll continue to pursue their options, but it seems to me that the number of options are not that great," he said. "Mystic is one of the only small community banks down that way and I guess that's what prompted them to get involved."
This is not the first time Washington has expressed interest in entering nearby Connecticut, especially through Mystic.
The $500 million-asset company, whose main office is located on the banks of the Pawtucket River separating the two states, held unsuccessful talks with Mystic a few years ago.
But Mystic proceeded with the Norwich talks, and "we felt we could at least make a counteroffer and see what their reaction was," Mr. Kirby said.
"It was a definite surprise," said Mystic president and chief executive Charles A. O'Malley 3d.
"Connecticut is just a stone's throw away and it was a very strategic move for us," Mr. Kirby said, noting that the 194-year-old company has long had customers in both states. "It would have helped take care of their needs and I'm sure we could have expanded it further."
Washington had first extended the unexpected offer in late October, three months after the agreement with Norwich was announced. After the initial rejection, Washington tried to sweeten the deal with specifics, including a price of $9 in Washington common stock for each share of Mystic.
Under the Norwich agreement, each share of Mystic would be worth $2.40 in cash and $5.60 in Norwich common stock. That means Washington was offering $1, or 12.5%, more than Norwich, but the Mystic board still chose to plod on with its agreement.
"It was a genuine offer that we felt was fair and equitable and we had no intentions of pursuing it in a nonfriendly transaction," Mr. Kirby said. "The [Mystic] board was pretty much committed to [Norwich] and without their support, it didn't make sense for us to proceed."