Metrobank in East Moline, Ill., is suddenly a hot commodity.
In the past month the $551 million-asset bank has received two unsolicited offers from potential buyers saying they had taken a liking to Metrobank's core deposits, branch network, and trust capabilities.
And though Gary Andersen, the president and chief executive officer of Metrobank's holding company, Metrocorp Inc., said he would prefer to keep the bank independent, he recognizes that the board has a responsibility to shareholders to consider any offers.
"You have to evaluate it," Mr. Andersen said. "You can't just say, 'We're not going to sell,' unless you have 51% of the stock."
Hostile takeover bids are rare in banking, and statistics show that only a handful of those attempted between 1994 and 2004 succeeded. Still, bidding wars erupt occasionally and prices become too enticing for shareholders to reject, investment bankers say.
Metrocorp's board and employees control 13% to 14% of the stock. The company is not publicly traded; instead local brokers make a market in the stock.
The bidding began in mid-August, when Mr. Andersen got a phone call from the $436 million-asset National Bancshares Inc. of Bettendorf, Iowa, offering to buy Metrocorp for $62.4 million in cash - or $52 a share. When he said no, National took its offer directly to Metrocorp shareholders, according to Mr. Andersen.
Then, on Sept. 9, the $608 million-asset Blackhawk Bancorp. Inc. of Milan, Ill., approached Metrocorp with an offer of $62 a share.
Mr. Andersen said the board is no longer considering the lower offer, because its investment bankers value the company at $71 a share. He said he could not speak for the shareholders.
National said it would be willing to revise its offer but that Metrocorp's board has not given it an opportunity to do so. John D. DeDoncker, the president of National Bank, National's subsidiary, said the 4-year-old National made its offer after some Metrocorp shareholders approached him about buying it.
"I know that many of their large shareholders would prefer to do a stock deal, which we've expressed a willingness to talk about," he said. "We've never had an invitation to tell the board what we would be willing to do."
Though Mr. Andersen says he is not sure why other banks have become interested in Metrocorp, the bidders say they like its strong deposit base and network of 18 branches in Illinois and Iowa. It also has a trust department, which neither Blackhawk nor National has.
Mr. Andersen said that given these attributes, the board believes his company is well positioned for growth.
Nonetheless, Metrocorp's board is evaluating Blackhawk's offer and plans to make a recommendation to its shareholders within 10 days, Mr. Andersen said.
John C. Donnelly, a managing director of Donnelly, Penman, French, Haggarty & Co. in Grosse Pointe, Mich., said that if a bank wants to stay independent it must perform well and have a good business plan.
This, though, is where Metrocorp may be vulnerable. Its return on assets has been hovering around 1% in recent quarters, according to Federal Deposit Insurance Corp. statistics; the average is roughly 1.44% for commercial banks with $500 million to $1 billion of assets. Its return on equity of 9.86% in the second quarter was well below its peer group's average of 14.25%.
W. Gerard Huiskamp, Blackhawk's chairman and president, said its offer is not hostile and that Blackhawk has no intention of taking the offer to shareholders if its offer is rebuffed. He said Metrocorp came to its attention after some Blackhawk customers, who are also Metrocorp shareholders, asked if National's offer was fair. (All three banks are in the Quad Cities area of eastern Iowa and western Illinois.)
Mr. Andersen maintains that Metrocorp would be better off independent.
"We're 101 years old," he said. "We have very strong relationships with the community and schools. We want to keep going."
