Updated: Bryn Mawr Trust Co. has cancelled its $33 million plan to buy MidCoast Bank, the third-largest local bank based in Wilmington, after MidCoast chief executive Jim Ladio, who had been tapped to lead the banks' combined Delaware operations, abruptly left. (Read BMTC's brief SEC statements, which don't say why the deal blew up, here. Read my note on the March sale agreement here.)
Bryn Mawr CEO Ted Peters had said Ladio would run the combined companies' Delaware operations when he announced the merger, and reaffirmed this when the banks' executives held a meet-and-greet for clients at the Chase Center on Wilmington's Christina riverfront.
Did Ladio's departure queer the deal? Peters told me he couldn't comment beyond the SEC filing, citing a confidentiality agreement. Ladio did not respond to a call to his Delaware home. Acting MidCoast chief James Keegan's office gave this statement: "As a matter of policy we are unable to discuss any individual employment issues that relate to Mr. Ladio at this time." He added, re Bryn Mawr: "Both organizations mutually decided to go their separate ways."
What does the failed acquisition mean for Bryn Mawr, the largest bank still based in suburban Philadelphia? "MidCoast was a relatively small deal for Bryn Mawr," and Bryn Mawr will likely keep looking to buy other banks, instead of being acquired, as Peters moves toward his scheduled retirement late next year, bank analyst Casey Orr told clients of Sandler O'Neill + Partners in a report last week.
"Our experience suggests that deals that do not close fail to do so as the result of worse-than-anticipated credit" at the bank being bought -- "or failure to culturally integrate, " said Matthew Schultheis, bank analyst at Boenning & Scattergood in West Conshohocken. Better to kill the deal as soon as problems surface, he added.
Before starting MidCoast in 2006, Ladio was an executive of Artisans Bank, now Wilmington's #2 locally-based bank after WSFS.
MidCoast 's core of lenders and bosses also includes veterans of what used to be Delaware's dominant bank, Wilmington Trust Co., which was sold at a discount price to M&T Bancorp in 2010 after losing $1 billion from failed development projects in southern Delaware and other overheated markets.
Ladio's wasn't the only sudden departure from MidCoast. In May, business lender Brian Bailey resigned after his former subordinate at Wilmington Trust, Joseph Terranova, pleaded guilty to federal charges that Terranova illegally concealed bad loans to Dover developer Michael Zimmerman. Terranova's indictment also described alleged management failures by unnamed Wilmington Trust executives. Bailey has not been accused of wrongdoing. Read my account of Bailey's departure here.
Separately, since Wilmington Trust's collapse, which erased billions of dollars in local and national investors' share value and hundreds of Wilmington jobs, Delaware banking has been roiled by investigations and indictments. Federal prosecutors in Wilmington and Philadelphia have accused developers, including Zimmerman, as well as lenders like Terranova of frauds that helped drive the bank out of business. Zimmerman has denied wrongdoing.
Last week, developer Zimmerman was indicted by Delaware Attorney General Beau Biden on charges of making illegal payments to Delaware Gov. Jack Markell in Markell's re-election campaign. Zimmerman says his contributions were legal. Markell has not been accused of wrongdoing. Both Biden (son of U.S. Vice President Joe Biden) and Markell are Democrats. Read the Wilmington News-Journal's account of the indictment and Zimmerman's not-guity plea here.