First Maryland Bancorp, in a bid to expand its presence in the Washington area, yesterday said it has agreed to acquire a Washington investment advisory firm for $15 million.
With Zirkin-Cutler Investments, First Maryland would get a respected money manager with $1.2 billion in assets whose clients include wealthy individuals, retirement funds and nonprofit organizations.
Under the letter of intent announced yesterday, the companies said Zirkin-Cutler would operate as an independent subsidiary and keep its name. Principals Harold Zirkin and Marshall Cutler would continue to run the business.
"They're a well-respected boutique, if you will, in Washington," said Walter R. Fatzinger Jr., the First Maryland executive vice president who runs the company's trust division. "We're looking for ways to expand our fee income and to expand our presence in the Washington marketplace."
"Essentially they focus on high-net-worth individuals," Mr. Fatzinger said. But "it could be that as a trust company from time to time we'll be competing with them."
Mr. Fatzinger's history with Zirkin-Cutler dates back a decade, when the investment firm was a client of his former company, Security Trust Co., which was a subsidiary of MNC Financial Inc. Mr. Zirkin served on the board of Security Trust.
Mr. Zirkin said he likes the fact that so many former Security Trust executives now work at First Maryland, the parent of the First National Bank of Maryland. "There's a lot to be gained by affiliating with a larger institution," he said, including access to research capabilities and possible client referrals.
The acquisition, if approved by federal regulators, would increase First Maryland's assets under management to $5.2 billion, including about $1.5 billion in the company's six Ark mutual funds.
Most of those assets are managed out of Baltimore. It was only last fall that First Maryland opened a Washington, D.C., office of its trust company.
Like most banks, First Maryland is working to increase its fee income, or revenues from nonlending activities. In addition to the $4 billion in managed assets, the company has a $40 billion portfolio of corporate trust and custody assets, which don't require investment management.
Mr. Fatzinger said First Maryland will announce plans soon to set up two subsidiaries.
Though the names of the two planned companies haven't been chosen yet, the leaders have. Charles G. Cusic, a senior vice president who currently handles First Maryland's $40 billion custodial trust portfolio, will be president of the new trust company; and Jennifer Lambdin, a senior vice president and chief investment officer for the trust division, will be president of the investment business.