PhillyDeals: More small banks are going belly-up

It happens every Friday: The Federal Deposit Insurance Corp. announces it has seized another failed bank, or a bunch of them.

Most are small, and most are in boom-and-bust states like Georgia, where bankers apparently made loans to any ambitious developer or home buyer with Cadillac tastes but skateboard incomes, so the rest of us could bail them out.

FDIC has shut 81 lenders so far this year, up from 26 last year, three the year before, and none in 2005-06. "Perhaps another 150 to 200 banks will fail," writes veteran bank-watcher Richard X. Bove of Rochdale Securities L.L.C.

Bank regulators seem to believe that giant investment banks such as Goldman Sachs Group Inc., commercial banks such as Citigroup Inc. and Bank of America Corp., and big regionals such as Wells Fargo & Co. and PNC Financial Services Group are stable now. They may be lending less, and boosting fees, and writing off more bad office-building loans, but thanks to government capital infusions last year, they won't likely need more heroic measures soon.

So Bove says the government's "concentrating on strengthening" smaller banks, which means killing the weak ones.

So far, Philadelphia-area banks have been spared from triggering FDIC bank-bailout insurance, with the weakest, such as Harleysville National Corp., finding out-of-state buyers.

In fact, Northeastern banks that trade in the stock markets face relatively low losses and fetch "a hefty premium" to banks elsewhere in the United States, wrote analysts Jason O'Donnell and Matthew Schultheis at Boenning & Scattergood Inc. in West Conshohocken yesterday. They say losses are especially low at Bryn Mawr Trust and Univest Corp. of Pennsylvania; capital is especially strong at Beneficial Mutual Bancorp Inc. and Fox Chase Bancorp Inc.

At a time when corporate books are under extra stress and scrutiny, accounting and advisory firms are partnering up.

Midmarket accountants Margolis & Co. P.C., with operations in Bala Cynwyd and Newtown, plans next Tuesday to combine with New York-based Marcum L.L.P.

"The entire Margolis team [of 70 people] will join Marcum," which previously employed more than 700, Jeffrey Weiner, managing partner of Marcum, announced in a statement. Margolis' David H. Glusman will run the new Marcum Philadelphia region.

Last week, Smart Business Advisory & Consulting L.L.C., of Devon, the largest accounting firm with headquarters still in the Philadelphia area, said it was being acquired by publicly traded LECG Consulting, of Emeryville, Calif. Smart chief executive officer Steve Samek will be the boss of the firms' combined 2,000 workers and $370 million in yearly sales.

Smart has evolved quickly since Boston investor Great Hill Partners L.L.C., which is helping finance the LECG deal, bought a controlling interest two years ago. Last summer, founder Jim Smart stepped down after 20 years. In December, Samek, head of Chicago-based UHY Advisors Inc. and a onetime Arthur Andersen partner, was tapped as Smart's successor.

Where will headquarters be? No word yet. Samek once told me a boss ought to spend a lot of time running things from the road, where clients and the people who serve them are. That's where he's going, starting today - to visit local offices and persuade people to stay.

That's the hard part about making deals, Samek told investors when he announced the combination Aug. 18. "Risk in transactions tends to happen when people defect," he said in a conference call. And that happens "when there are significant overlaps in services, where people see their particular book of business at risk."

He said anxious merger-ees want to believe that LECG and Smart services are "very complementary," but "not overlapping." Samek termed that "a great opportunity to further penetrate our clients."

But LECG chief financial officer Steven R. Fife said "there is overlap" between Smart's 13 offices and LECG's decentralized office network.

Also last month, accounting firm Parente Randolph L.L.C., of Philadelphia, said it was combining with New Jersey-based Beard Miller Co. L.L.P. to form a 170-partner, 1,200-employee combination, with Parente chairman Bob Ciaruffoli as chief executive and Beard Miller boss Lamar Stoltzfus as chairman. They'll announce a name when the deal closes later this year.