1st Mariner drops effort at takeover Bank of Glen Burnie buys Hale's 19% stake for $5.6 million

A promise to stay away

Baltimore company still plans expansion in Anne Arundel

Banking

November 19, 1998|By Bill Atkinson | Bill Atkinson,SUN STAFF

In a surprise move, First Mariner Bancorp ended its yearlong battle to acquire Glen Burnie Bancorp, selling its 19.5 percent stake in the Anne Arundel County banking company for $5.6 million and other considerations, the companies said yesterday.

Baltimore-based First Mariner sold 213,169 shares to Glen Burnie Bancorp, which paid $26.18 a share.

The sale ends a feud between the banks with each side claiming victory.

"This is a pretty significant day for First Mariner Bank," said Edwin F. Hale Sr., a Baltimore shipping executive and First Mariner's chairman. "This is business, and look at the results for us and for our shareholders. That is all I care about."

First Mariner made a profit of $1 million on the sale of the stock after buying it for $4.6 million, and it entered into a "standstill agreement" that requires Glen Burnie Bancorp to pay the banking company $675,000 over the next five years.

Under the agreement, each company will drop all lawsuits. In addition, First Mariner has agreed not to purchase any more shares in Glen Burnie Bancorp, or attempt to "influence" its affairs for 10 years.

"We thought that it was a good business decision to get rid of the lawsuits and get rid of him [Hale]," said F. William Kuethe Jr., president and chief executive of Glen Burnie Bancorp, which has seven branches and $218 million in assets.

"Any time you solve a problem, you are relieved. We felt it was a bargain to us. We would have spent that much [$675,000] in legal fees over five years if these lawsuits kept going. This will just get rid of all of it."

Kuethe said the shares purchased from First Mariner will be retired. The money used to buy the stock came from the company's capital, which has fallen to $14.07 million from $19.206 million. The company remains well capitalized, Kuethe said.

Hale said an employee picked up the $5.6 million check from the sale of the stock, which was made out to First Mariner, and deposited it in a Federal Reserve account so that it could draw interest immediately.

First Mariner's decision to sell the stock came six weeks after the Fed gave the banking company approval to buy a 19.5 percent stake in Glen Burnie Bancorp.

Shortly after the Fed's decision, an attorney for Glen Burnie Bancorp approached a First Mariner director and negotiations began.

Hale said his main goal was to buy Glen Burnie Bancorp and merge it into First Mariner, which is 3 years old and has $460 million in assets and 22 branches.

He said he was preparing to wage a proxy fight to oust Glen Burnie Bancorp's directors in March, when the company will hold its annual meeting.

In March this year, after two offers to buy Glen Burnie Bancorp were rebuffed, Hale backed a dissident director in her efforts to install a new board, which was unsuccessful.

"It was very clear they were going to put up a staunch defense to our vigorous attack," Hale said. "The attorneys would have won and no one else."

First Mariner said it will continue to expand in Glen Burnie Bancorp's back yard. It plans to open as many as eight branches, two of them in Anne Arundel County, Hale said.

Kuethe said he is glad the ordeal is over.

"I think he [Hale] felt the way we did. We were tired of the lawsuits and fighting," Kuethe explained.

"He is making a profit and getting out of it. We certainly didn't want to go through these lawsuits and fights more than we had to."

Pub Date: 11/19/98

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