Maryland Company Paying $6M for Suitor to Get Lost

A long-running feud between two Maryland banking companies has ended with one agreeing to pay its aggressive neighbor more than $6 million to go away.

Glen Burnie (Md.) Bancorp said Wednesday that it will pay about $5.6 million for 231,000 shares owned by First Mariner Bancorp. First Mariner, based in Baltimore, had been buying shares over the past 18 months in a failed attempt to acquire the company.

Glen Burnie also agreed to pay First Mariner $675,000 in cash over the next five years to not buy any more of its shares.

"We are more relieved than anything else," said F. William Kuethe Jr., president and chief executive of $218 million-asset Glen Burnie.

"Its a good feeling to assure your independence."

Mr. Kuethe said Glen Burnie will use its capital reserves to pay for the stock. The bank would still have $6 million in cash after the transaction, enough to remain well capitalized, he added.

First Mariner, with $460 million of assets, will make about $600,000 before taxes on the transaction, said president and chief executive officer Edwin F. Hale Sr. It bought the stock at an average price of about $21.

"Our first goal was to merge the two companies, because we believe it was a natural fit," Mr. Hale said.

"But for a bank like ours that earned $180,000 last quarter, $600,000 is a nice sum."

"I think First Mariner decided that the legal fees of continuing this would have outweighed the assets they would gain," said Collyn Bement, an analyst with Ferris, Baker, Watts in Baltimore.

The battle between the two banks started in mid-1997, when First Mariner bought 5,000 shares of Glen Burnie. In January of this year it bought an additional 200,000 shares from a private investor and offered to buy the remaining 80%. That offer was rejected.

In March, Glen Burnie shareholders defeated a slate of board candidates who favored sale to First Mariner.

That proxy contest led to both companies' filing suit against the other.

Under the agreement reached this week, all suits between the two parties were dropped.

"We were tired of lawsuits and proxy battles, and so were they," Mr. Kuethe said. "This way we can both get back to banking."

There is now a good chance the rivalry will move to the retail playing field.

Mr. Hale said his company, which has opened five branches this year, plans to open six more in 1999, including some in Glen Burnie's market area.

"We already own five locations in the county, and we are definitely going to open more," he said.

"The premium Glen Burnie is paying will definitely assist us."