What will Bryn Mawr buy next?
Bryn Mawr Trust Co. is hunting for more small banks and money managers to buy
Little Bryn Mawr Trust Co. "is well positioned to pursue additional acquisitions," writes Casey Orr, bank analyst at Sandler O'Neill + Co. in New York, in a report to clients recommending the stock.
BMTC plans to nearly double, to $3 billion in assets and $5 billion in client investments, over the next three years, through more acquisitions like last year's First Keystone deal and the pending Hershey Trust purchase. It's more profitable than most banks its size. It didn't need federal TARP money, and has been able to raise deal cash thorugh securities sales.
And Bryn Mawr holds few of the development loans that sunk its larger rival, Wilmington Trust Co. (where development-loan losses forced a discount-priced sale to M&T Bank).
What will Bryn Mawr buy? There's plenty of potential sellers: Small banks haven't been profitable, especially since interest rates sank in the mid-2000s, as Philadelphia banking lawyer Alan Fellheimer notes. Federal regulators have been reluctant to approve mergers in the recent weak business environment. But as interest rates rise (starting late this year, Sandler thinks) Bryn Mawr will be in a stronger position to go after bigger targets.
Bryn Mawr touts its personal-asset management servcies, but Orr notes the business only "began to really take off" after the bank's 2008 actuisitoin of Lau Associates LLC, which targets "high net worth individuals and families" through Delaware trusts and other tax-avoidance schemes.
Isn't Bryn Mawr itself merger-bait, under 61-year-old Frederick C. "Ted" Peters, who sold his two previous banks? Maybe not soon; there's not a lot of big banks that could benefit from even a profitable Bryn Mawr, small as it is.