Howard Bancorp in Ellicott City, Md., has agreed to buy Patapsco Bancorp in Dundalk, Md.

The $691 million-asset Howard will pay $10.1 million, or $5.09 a share, in cash and stock for the $226 million-asset Patapsco.

Phil Phillips, Patapsco's president and chief executive, was offered an executive position at Howard. Patapsco's chairman and one other director will join Howard's board.

"We are excited to significantly reinforce our present franchise in Baltimore County, to enter Baltimore City, and for the opportunity to expand the reach of our diversified financial solutions in these very desirable markets," Mary Ann Scully, Howard's chairman and chief executive, said in a press release Tuesday.

Griffin Financial Group and Ober Kaler advised Howard. Keefe, Bruyette & Woods advised Patapsco, with Kilpatrick Townsend & Stockton serving as legal advisors.

Howard also said it plans to raise $25 million through a private placement of roughly 2.2 million shares of its common stock. The stock will be sold to institutional investors at $11.50 a share. The company said it plans to use proceeds from the placement to support the Patapsco acquisition and other growth efforts. Howard noted that it has so immediate plan to exit the Small Business Lending Fund.

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