Between 1997 and 2004, Susquehanna Bancshares Inc. of Lititz, Pa., focused its expansion efforts within its home state, buying banks in Pottstown, York, Everett, and Bryn Mawr. Now it is looking farther afield.
In September, the $7.5 billion-asset company opened a branch in greater Baltimore, and its chief executive said last month that it is eyeing that market for further growth.
And late Monday the company announced it had agreed to buy Minotola National Bank in Vineland, N.J., for $165 million in cash and stock. It would be Susquehanna's second-biggest acquisition.
William J. Reuter, Susquehanna's chairman, president, and CEO, said in an interview Tuesday that he still sees some opportunities for growth in Pennsylvania - especially in York and Lancaster counties - but that most of the places he is targeting are in Maryland or southern New Jersey, where the $623 million-asset Minotola operates.
Pennsylvania's population rose just 1% between 2000 and 2004, according to census data. In Atlantic County, N.J., where Minotola has five branches, the population grew more than 6% between 2000 and 2004; and Cumberland County, N.J., where Minotola has eight branches, "is on the cusp of some real significant growth," Mr. Reuter said Tuesday.
"When we drove out there with the Minotola people, we could see all the new housing starts," he said.
David W. Darst, who covers Susquehanna for First Horizon National Corp.'s FTN Midwest Research in Nashville, said it is trying to "improve the demographics of its footprint" by moving into contiguous markets with faster growth than Pennsylvania.
After buying Minotola, 21% of Susquehanna's deposit base would be in New Jersey, Mr. Darst noted.
Mr. Reuter said Susquehanna would like to expand in the counties that surround Baltimore, including Howard, Carroll, Hartford, and Anne Arundel. He added that it does "a fair amount of lending" in northern Virginia and that a move there is a possibility.
Susquehanna is not the only Pennsylvania community banking company to look across state lines for growth opportunities. In a deal announced Monday, Northwest Bancorp of Warren said it was buying a bank in Owings Mills, Md. And the last four acquisition deals announced by the $12.3 billion-asset Fulton Financial Corp. of Lancaster have been for banks in New Jersey, Maryland, and Virginia.
Minotola reported net income of $5 million for the first nine months, and its credit quality is well above the industry average. Its nonperforming loans were 0.24% of its $497 million portfolio on Sept. 30, and chargeoffs were just $150,000. Mr. Reuter said the Minotola acquisition would be immediately accretive to Susquehanna's earnings.
Dennis W. DiLazzero, Minotola's president and CEO, said his company had built a reputation for providing high-touch service but could not afford to offer popular products such as wealth management and online bill payment, and that it was being priced out of the home equity market.
"It became obvious that we were going to be at a bigger and bigger competitive disadvantage," he said Tuesday. "The issue wasn't, Are we going to merge? it was, Who are we going to merge with?"
Susquehanna, which has three subsidiary banks, plans to merge Minotola into Susquehanna Patriot Bank of Marlton, N.J. Mr. DiLazzero, 61, would be Patriot Bank's chief operating officer.The bank would have 29 branches in New Jersey and 26 in Pennsylvania.
"I've known and respected a couple of people at Susquehanna for a number of years, and they specifically asked me to stay, which is flattering," Mr. DiLazzero said. "And frankly, my golf game isn't good enough for me to retire."
