A small bank near Baltimore has run afoul of regulators, apparently, its recently appointed president and chief executive officer says, for growing too fast.

Joel Sweren declined to discuss why the Federal Reserve Bank of Richmond disciplined Maryland Permanent Bank and Trust Co. of Owings Mills, except to say that the agreement signed last month "relates to activities that occurred because we grew the bank quickly."

Maryland Permanent Capital Corp., the bank's privately held parent, signed the agreement, in which it promised not to pay dividends, buy back stock, or borrow money without first getting written approval from the Richmond Fed.

Between Dec. 31, 1997, and Sept. 30, 2000, the bank's assets rose 135%, to $130 million. During the same period, the average bank with less than $100 million of assets grew 3.5%, according to the Federal Deposit Insurance Corp.

Mr. Sweren attributed Maryland Permanent Bank's growth to advertisements that highlight the bank's status as one of the state's most prolific small-business lenders.

The bank made more than 1,253 small-business loans worth $102 million in 1998 and 1999, according to the U.S. Small Business Administration. It ranked among the state's 10 biggest lenders for small businesses each of those years, according to the SBA.

Maryland Permanent says it has toned down its advertising campaign since it hired Mr. Sweren in November.

The rapid growth created credit quality problems. Between Dec. 31, 1997, and Sept. 30, 2000, nonperforming assets more than tripled, to $2.62 million, according to the FDIC. Its efficiency ratio jumped from 57.35% to 82.97% during the same period.

Mr. Sweren said Maryland Permanent has resolved the problems that led to the written agreement. "Our bank is stronger and operates more efficiently now than it did six months or a year ago."

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