Magazine article American Banker

Meridian More of an Acquirer Than a Target

Magazine article American Banker

Meridian More of an Acquirer Than a Target

Article excerpt

Analysts consider Meridian Bancorp to be a takeover target, but management continues to pursue its own aggressive acquisition campaign.

On Thursday, the Reading, Pa., bank holding company announced its fourth and fifth acquisitions this year. These deals were its first in New Jersey.

Furthermore, Samuel A. McCullough, Meridian chairman and chief executive, affirmed in a telephone interview his company's plans to go it alone.

"There are a lot of people who I'm sure would be interested in us, but our strategy is to remain independent," he said.

Meridian's stock price is up about 20% this year. Late Thursday, Meridian shares were trading at $28.50, unchanged from Wednesday.

Earnings Rebound Cited

However, analysts consider the stock to be undervalued because they think it has the potential to be acquired for a hefty premium. They also cite rebounding earnings.

The shares trade at about 1.5 times book value. In contrast, shares of rivals such as PNC Financial Corp., Pittsburgh, and CoreStates Financial Corp., Philadelphia, are trading at about 1.7 times book value.

The deals for 21 branches of Security Savings Bank, Vineland, and for Cherry Hill National Bank, Medford, should add about $928 million in assets, to about $12.5 billion.

But analysts said the deals announced Thursday were too small to give Meridian the size it probably will need to survive in competitive eastern Pennsylvania and southern New Jersey.

"I don't think they want to be taken over, but I don't think they have done anything to [avoid] being a [takeover] candidate themselves," said Mary Quinn, an analyst at Keefe, Bruyette & Woods Inc.

Her Keefe colleague Joseph C. Duwan said PNC Financial is the most likely candidate to acquire Meridian and could easily pay two times book value, the minimum level seen needed to acquire Meridian. At twice book value, Meridian would fetch about $1. …

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