Baltimore’s oldest remaining independent bank met its end Friday, as M&T Bank acquired Provident Bank for $401 million in stock.
Provident’s roots in Baltimore stretch back to 1882, but a year after Mercantile merged with out-of-town powerhouse PNC, it became the last local bank name to fall from the city’s skyline.
The purchase sets up Buffalo-based M&T Bank as an even bigger player in the local market. The addition of Provident’s assets will give M&T 253 branches in Maryland and 599 ATMs statewide. M&T said it expects to gain approximately $4.6 billion in deposits and $4.3 billion in loans in the merger, giving it the second-largest deposit share in Maryland, behind Bank of America.
“If you look at the resulting organization, you’re going to have a dominant banking institution in Maryland, to say nothing of Baltimore,” said Woody Collins, president of M&T Bank’s Mid-Atlantic Division.
The deal values Provident stock at $10.50 a share, well above its Thursday close of $5.80. Provident shares closed up 61 percent to $9.33 in heavy Nasdaq trading Friday.
The merger comes amid one of the worst economic crises in U.S. history, which has hit financial institutions particularly hard.
In recent months, Provident was stung by losses in its real estate investment portfolio, including a $24.6 million write-off of its securities in the third quarter.
“We’re looking forward to a new beginning with M&T,” Gary Geisel, chairman and chief executive officer of Provident Bank, said in a conference call Friday. “We really wanted someone who would keep the legacy of the Provident way.”
Collins said the two banks began serious discussions about a deal after Thanksgiving. Local bank watchers said there likely wasn’t a specific trigger for the deal other than the general economic downturn.
“I don’t think was a problem-generated transaction, I think the management of Provident decided the offer from M&T Bank was in the best interest of their shareholders,” said Frank Bonaventure, a banking expert with Baltimore law firm Ober Kaler. “I’m not aware of any triggered event saying, ‘OK, its time for us to sell.’ ”
Provident Bank is the eighth-largest bank in Maryland in deposits, and last month received a $151 million investment from the Treasury Department designed to assist healthy banks in continued lending. Those funds will carry into the new merged organization.
Collins said the extent of layoffs in connection was not clear, but said M&T would work to preserve as much of Provident as possible, focusing on personnel with day-to-day interaction with customers.
Staff Writer Andrew Cannarsa contributed to this story.
