BALTIMORE -- Arthur L. Silber, president and chief executive of Sterling Bank & TrustCo., is a picture of tranquillity, seated in his office in his black pin-striped suit and Rolex watch.

But mention the name Provident Bank and he bristles.

"I'm not about to permit anybody to disparage what we have done and what we have built," said the 54-year-old banker.

Provident and Sterling are at war.

On March 3, Sterling, a $70 million-asset bank that caters to the wealthy, sued Provident Bankshares, accusing the $1.8 billion-asset company of breaching a merger agreement. Sterling is seeking to enforce its agreement, and it wants $5.4 million in damages, according to documents filed in the Circuit Court for Baltimore City. The ease is expected to go to trial next March.

The same day the suit was filed, Provident countered with a stinging press release that claimed Sterling officials misled the company about the quality of the bank's loan portfolio. The bank has petitioned the court to dismiss Sterling's suit.

"Usually, banks sue to avoid being acquired," Carl W. Stearn, Provident's president and chief executive, said in a public release. "The whole thing strikes me as a little strange."

Provident also filed a counter claim in May seeking $5 million in damages. Not only does the counter claim allege that bank officials were misled, it argues that Sterling had regulatory, problems that it did not disclose, and it even calls into question whether the bank serves wealthy clients.

On Shifting Sands

Indeed, this is a peculiar case that has raised more than a few eyebrows in Baltimore's financial circles. It demonstrates that, at a time when consolidation among community banks is picking up steam, deals can blow apart as quickly as they are put together.

It also speaks volumes about the tenacity of Mr. Silber, a nervy banker who says he isn't about to back down, because he and his shareholders stand to make millions on the deal.

They are shooting for what Mr. Silber calls the "double dip." After the Sterling deal is completed, he believes it will be only a matter of time before Provident is acquired. Mr. Silber owns 9.5% of Sterling and expects to make substantially more than $1 million if the transaction is finalized.

"We weren't going to walk away from millions of dollars," he said. "That is why we agreed to sell the bank at only 1 1/2 times book value. We were really looking at the long term."

Although he's been in the business for about 30 years, Mr. Silber has followed anything but the usual career path. He sold insurance in the 1960s, ran an optical business in the '70s, and today owns a minor league baseball team in Virginia that he says is worth more than $5 million.

He's polished, well coiffed, and bold. He has annoyed some in Baltimore's stuffy banking community by appearing in his own radio ads.

"He's the banker with the biggest ego in the state," said a banker who didn't want to be named.

Mr. Silber said he doesn't need to make radio ads to stroke his ego.

"My ego is already enormous; it doesn't need to be fed any more," he said.

Sterling isn't your typical bank, either. It's in a cobblestoned alley across from upscale eateries and shops. Customers have to punch a code to get into the building, pass a security camera, and hike up a flight of stairs to the second floor, where Mr. Silber and his staff conduct business.

There are no tellers and no lines of people. The bank serves Danish pastries and coffee on fine china in the morning, and glasses of wine in the afternoon. Its customers are generally people who have accumulated wealth by operating a business or by inheriting money, Mr. Silber said. The average amount a customer deposits with the bank is $70,000.

"We try to stay away from the professional people [doctors], because they just don't have the net worth," Mr. Silber said.

Real Estate and Baseball

The bank generally makes credit lines with a 12-month term, secured by real estate or securities. It also makes adjustable-rate mortgages and some commercial real estate loans, and has loans to several minor league baseball teams.

Mr. Silber prides himself on his investment savvy, and he readily discloses his conquests. After a stint as chief financial office at a Maryland savings and loan, he became president and chief executive of Chesapeake Savings and Loan, Annapolis, in 1983. He converted the thrift to a stock institution at $9 a share and in 1985 sold out for a killer $35.42 a share.

"I walked away with about a seven-figure payout," he said.

Another shrewd investment was his acquisition of the Prince William Cannons, a farm club for the Chicago White Sox, in 1990 for $600,000.

"It's a big money-maker," said Mr. Silber, who owns 80% of the team with his children. "I recently turned down $5 million for the ball club. A cash offer. It's absolutely a wonderful business. Minor league baseball teams... have tremendous cash flow."

Mr. Silber, who was once offered a contract to play minor league ball, takes batting and fielding practice before home games. A year ago, he was married at home plate in a Jewish wedding ceremony before 150 friends and relatives. He wore a pin-striped Cannons uniform and a white yarmulke.

Thrift Became Private Bank

Mr. Silber joined Sterling three years before he bought the Cannons. It originally was a thrift started by former Chesapeake customers. He converted it to a bank and put his stamp on it by emphasizing private banking.

Provident wanted to acquire Sterling because it was looking to build a private banking department. Sterling also had a decent track record, earning $710,000 in 1993 and $791,000 in 1992. But its loan portfolio wasn't spotless. In 1993, the ratio of nonperforming loans and foreclosed real estate to gross loans stood at 2.87%, down from 4.08% in 1992 and 7.86% in 1991.

On Dec. 15, Provident announced that it had signed a letter of intent to buy Sterling and that its board had approved the deal in principle. Two months later, Mr. Steam telephoned Mr. Silber and told him the deal was off.

"I was absolutely shocked," Mr. Silber said. "Absolutely shocked."

Mr. Silber accuses Provident of backing out because the deal became too expensive. Since the announcement Provident's stock has jumped to about $23.25 from around $18.

Fundamental Disagreements

Mr. Silber maintains that the Dec. 15 written agreement was legally binding, and that the agreement did not contain a provision permitting Provident to scuttle the deal based on a duediligence review of Sterling's business.

But Provident says Sterling officials weren't forthcoming, and when it found "numerous problems," it simply walked away from the deal.

"Sterling's merger proposal was premised from the outset on misrepresentations," according to court documents.

Mr. Silber said Provident officials dug up old examination reports and misquoted them.

"I don't think Mr. Stearn ever believed a $70 million bank would sue a $2 billion bank," said Mr. Silber.

"They are going to complete the deal...or it is going to wind up costing them a ton of money," he added. "We have a rocksolid case."

Mr. Stearn declined to comment for this article. But when told that Mr. Silber said it was going to cost Provident a "ton of money" and that Sterling's suit was "rock solid," Mr. Stearn said: "Art Silber seems to be willing to talk to anybody about anything."

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