Shares of Philadelphia's JeffBanks Inc. soared last week on speculation that it could be a takeover target.
After months of trading just above $20, JeffBanks' shares jumped 29% last week, closing Friday at $27. More than 125,000 shares changed hands Friday, nearly six times the average daily volume during the last three months.
"Who knows how far they have gotten, but that sort of action suggests they are somewhere in the process" of selling, said Anthony Polini, an analyst at Advest Group Inc. in New York.
"JeffBanks has done a great job attracting business in Philadelphia," said Cassandra Toroian, a research analyst at Ryan, Beck & Co. in Livingston, N.J., "and I would think that they would look attractive to people wanting to get into the market."
JeffBanks' stock price retreated a bit Monday, closing at $26 on volume of 97,300 shares.
At midday Tuesday, it was trading at $25.25.
With $1.7 billion of assets, JeffBanks is the largest Philadelphia-based banking company.
Its assets have grown 30% since yearend 1997, thanks largely to runoff after First Union Corp. bought hometown giant CoreStates Financial Corp.
Betsy Z. Cohen, chairman and chief executive officer of JeffBanks, said she has no explanation for the sudden rise in JeffBanks' stock price. She said merger talk is a possibility but also suggested that investors are losing confidence in Internet stocks so "there could have been some money looking for something else to do."
Still, Ms. Cohen said, JeffBanks could be had for the right price.
"Twenty-eight percent of this company is held by directors and senior management," she said. "One would be foolish to think we are not keeping an eye out for shareholder value."
Mr. Polini mentioned two New Jersey companies, Hudson United Bancorp in Mahwah and Summit Bancorp in Princeton, as potential buyers.
He noted that Bob Goldstein, JeffBanks president and chief operating officer, has been a seller in the past and is well known to Hudson United executives. In 1996, Hudson United, then known as Hubco, bought Lafayette American Bank and Trust Co. in Bridgeport, Conn., where Mr. Goldstein was chairman and CEO.
"It would make a lot of sense for them to hook up with Hubco," Mr. Polini said. "Hubco needs a bigger presence in Philadelphia, and Bob has sold a company to them before."
Whatever the reason for JeffBanks' surge, analysts said the attention the stock is receiving is long overdue.
"It's a great franchise, especially with its technology-based small- business lending," Mr. Polini said. "They are superior to almost anything in Philadelphia."
Business has been especially brisk since CoreStates sold out to First Union in April 1998. Ms. Cohen said her company's loan portfolio grew by 22% last year and is on a pace to expand by 23% this year.
Before 1998, JeffBanks was expanding its lending at a rate of 12% to 15% per year.
"We refer to the First Union deal as the gift that keeps on giving," she said.
"The small-business market feels most of the discomfort from these mergers, and small-business lending is what we do."