Columbia Bancorp Plans New Bank In Baltimore County

October 21, 1990|By James M. Coram | James M. Coram,Staff writer

Columbia Bancorp, parent company of the Columbia Bank, is seeking to sell 925,000 shares of common stock at $10 a share in order to start a new bank in Baltimore County.

The bank would cost an estimated $5 million and would be near Towson in the York Road corridor.

According to a 55-page prospectus, "It is the intention of the company's management to transfer the bank's Glenmore branch and certain other customer relationships to the new bank."

The stock offering will end Oct. 31 and the stock is expected to be traded in early November, according to a spokesman for the underwriter, Ferris, Baker, Watts Inc.

If the stock sale does not produce enough revenue to capitalize the new bank, the company will continue to expand its Baltimore County business through the Glenmore office, the prospectus said.

Columbia Bancorp's overall strategy, the prospectus said, is to expand operations by organizing new community banks and "selectively acquiring" existing community banks.

Like the Columbia Bank, the new Towson bank would have a local board of directors. The new 17-member board would be comprised of former Glenmore directors, business and community leaders from Baltimore County, and the parent company's chairman of the board, Christopher W. Kurz, and its chief executive officer, John M. Bond Jr.

According to the prospectus, Columbia Bancorp became profitable during the quarter ending June 30, 1989, and has remained so ever since -- although the net profit decreased during the first two quarters of 1990.

If all 925,000 of the new shares are sold, the 2 -year-old holding company will have 1.72 million shares outstanding, including 337,643 held by the board of directors.

The June 30 net book value of a current share in the privately held company was $9.54, which would be diluted to $9.37 a share if the new offering is sold out.

The prospectus lists 13 risk factors to be considered prior to purchasing the new shares, including the bank's relatively short operating history (its loans are too new to show any signs of weakness), no assurance of future profitability, and no assurance of future dividends.

"For the foreseeable future," the company plans to retain its earnings to finance future growth, the prospectus said.

Since the shares are not publicly traded, the offering price of $10 a share was not based on an actual trading market for shares and there can be no assurance that the shares may be resold at the offering price, the prospectus said.

The prospectus warns that a slowdown in the economy may have an adverse effect on the company's operations and that government regulation could also be harmful.

The company is being sued for $2.5 million and for $335,000 in unrelated cases by two Montgomery County couples. The prospectus says the company has adequate defenses for both suits and will "proceed vigorously with foreclosure proceedings" against both couples.

The prospectus noted two problem loans -- a commercial loan of $250,000 and a consumer loan of $18,000 secured by an automobile. A residential loan of $343,000 that is 60 days past due and is in the process of foreclosure, "is well-secured, and management expects to collect principal and interest in full," the prospectus said.

In addition to board chairman Kurz and chief executive officer Bond, current directors who also would serve the proposed new bank in Baltimore County would be John M. Bond Sr., a retired vice president of Household Finance Corp.; William L. Hermann, manager of the Glenmore office; Michael K. Hooker, president of the University of Maryland in Baltimore County; Peter R. McGill Jr., president of the McGill Development Co.; and Theodore G. Venetoulis, chairman and president of V-COM Publishing Co.

The 10 people the company "has identified for election" to the new bank are Nicholas Brown, executive director of the National Aquarium in Baltimore; Joel D. Fedder, chief executive officer of the Fedder real estate company; Carol J. Glusman, business manager of Pathology Associates Laboratories; John W. Guckert, president of the Traffic Group Inc.; Nelson Hendler, clinical director of the Mensana Clinic; James F. Knott, president of Knott Development Corp.; John M. McIntyre, president of the medical staff at the Children's Hospital and Center for Reconstructive Surgery; Douglas L. Miller, Sr., president of C & D Corp. Inc.; Jacqueline Smelkinson, owner of Spare Room Antiques; and William F. Wilke, a retired contractor and developer.

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