Bryn Mawr Looking at Other Acquisition Opportunities

Bryn Mawr Bank (BMTC) in Pennsylvania has enough capital to keep make more acquisitions as it targets $3 billion in assets.

The $2.1 billion-asset company agreed on Monday to buy the $675 million-asset Continental Bank Holdings in Plymouth Meeting, Pa., for roughly $109 million. Bryn Mawr will keep looking at additional acquisition opportunities as it looks to deploy capital and build the size to match its existing cost structure.

"In no way does this acquisition take us out of" making more purchases, Ted Peters, Bryn Mawr's chairman and chief executive, said during a conference call Monday to discuss the acquisition. "We're open to more acquisitions in wealth management or banking. We're agnostic as to whether [deals occur] in wealth or banking."

Bryn Mawr, which has bought two banks in recent years, has conducted formal due diligence on about a dozen institutions and informally looked at more, Peters said. Bryn Mawr has "too much capital," Peters adding, noting that the company will still have an 8.5% tangible common equity ratio after the deal's expected closing in December. "There's plenty of fire power left" for acquisitions, Peters said.

The company has been looking at ways to grow — through acquisitions and on its own — after making sizable investments in areas such as technology. "We need to grow out of our fixed overhead," added Peters, who last month announced plans to retire at the end of the year.

Bryn Mawr bought the $100 million-asset Bank of Delaware in November 2012 and the $525 million-asset First Keystone Financial in mid-2010. It has also acquired three wealth management businesses since 2008.

Bryn Mawr agreed to buy MidCoast Community Bancorp in Wilmington, Del., in March 2013 but the companies terminated the merger last summer. The company declined at the time to discuss the termination, though Midcoast's founder and former CEO, James Ladio, later pleaded guilty to charges of bank fraud and money laundering.

Continental, founded in 2005, booked about $80 million in net loans last year, and Bryn Mawr's executives forecast similar growth this year. The bank also has a Small Business Administration operation, which Bryn Mawr lacks.

Bryn Mawr will be monitoring Continental's balance sheet in coming quarters, though. The company has an 85% loan-to-deposit ratio and a large secured book relative to its size, Bryn Mawr executives said.

Bryn Mawr expects to incur about $9.5 million in after-tax restructuring charges. Management also said they expect to cut Continental's annual expenses by 35% in a deal that should deliver 4.5% earnings accretion next year. Peters said he expects to earn back the deal's 4% dilution to tangible book value in less than four years.

"We believe we pay fairly for good value," he said. "We are paying fairly for what we perceive as very good value."

Continental will also get to place two people on Bryn Mawr's board. It is unclear if Kirk Wycoff, a veteran bank investment and Continental's chairman, will be one of the additions. Peters said there have been no determinations on who will join Bryn Mawr's board.