Richard A. Elko does not waste time.
The president and chief executive officer of a start-up that has not even had its grand opening yet announced an $87 million cash deal Wednesday to buy PSB Bancorp Inc. in Philadelphia.
Mr. Elko said buying PSB would give his newly formed, privately held holding company, Conestoga Bancorp in Chester Springs, Pa., a foundation on which it can build.
PSB is the parent company of First Penn Bank, which has 13 branches and $562.4 million of assets. The company has been a consistent underperformer and had a particularly poor first half, losing $624,000 in the second quarter and $5.8 million the previous one.
Mr. Elko, 45, said he intends to keep all of PSB's branches and virtually all the staff, but he would wring out inefficiencies to improve performance.
"We think there's an awful lot we can do with this company, and we're thrilled to have gotten it," he said.
Conestoga agreed to pay $17 a share - nearly two times PSB's book value and a 53.6% premium over its closing stock price Wednesday.
Mr. Elko said he thinks Conestoga got "a bargain."
"Stepping away from the numbers, this is a 13-branch community bank, and it is one of the few independent franchises left in the Philadelphia area," he said. "We think the raw materials are there and we can take it to the next level."
Conestoga opened its headquarters, which contains the only branch of its Conestoga Bank, in July. The company is planning to celebrate its grand opening this month, and Mr. Elko said it is looking for other buying opportunities.
The last time he was involved in a bank deal, he was selling.
The former president and chief executive officer of the $1 billion-asset Patriot Bank Corp. in Pottstown sold his company in June 2004 to Susquehanna Bancshares Inc. for $212 million in stock and cash, or nearly three times Patriot's book value.
At the time of the sale, Richard D. Weiss, an analyst with Janney Montgomery Scott LLC in Philadelphia, called Patriot "an up-and-coming bank."
No analysts cover either PSB or Conestoga, but Mr. Weiss said he is familiar with Mr. Elko from following Patriot.
Mr. Weiss said that he anticipates there will be "a decent amount of cleanup" to do at PSB, but that Mr. Elko is up to the task. "Rick Elko is a talented guy."
Mr. Elko said he started working to form Conestoga in October. Most of its team of 16 employees is made up of veterans of Patriot.
"I'm thrilled to get back in banking," he said. "This is what I do."
Anthony DiSandro, the president and chief executive officer of PSB, said it put in place the infrastructure and staff to accommodate growth to $750 million of assets, so its operating costs, which are higher than other banking companies of its size, hurt its profitability.
(Several years ago PSB hired outside advisers to analyze its options, including a sale. But Mr. DiSandro said it was not aggressively pursuing a buyer. He will not have a role at the Conestoga, and he would not discuss his future plans.)
Conestoga is "a good fit" for PSB, Mr. DiSandro said, because as a start-up, it will be able to capitalize on the branches and staff.
"It's a great deal all around," he said.
The deal is expected to close next quarter or in the first quarter. The deal's announcement gave PSB's stock a boost. By Thursday afternoon it had risen 43% from Wednesday's close, to $15.86 a share.
