N.J. bank seeks move to Elkton


First Fidelity Bancorp. of New Jersey has asked regulators for permission to move the main office of its primary bank from New Jersey to Maryland in a legal maneuver that would allow the company to own one bank with branches in three states.

Under the plan, submitted as part of First Fidelity's proposed purchase of Baltimore Bancorp, customers of the Bank of Baltimore could do their banking in Philadelphia or Newark, N.J., as easily as in Towson or Dundalk.

First Fidelity has its headquarters in Lawrenceville, N.J., but it moved the "main office" of its subsidiary, First Fidelity Bank, to Salem in southern New Jersey earlier this year. The main office is an arbitrary legal designation and doesn't indicate where the company actually has its headquarters. First Fidelity now is asking federal regulators for permission to move its main office from Salem to Elkton, Md., and then merge the bank with the Bank of Baltimore.

After that merger, the branches in Maryland would be part of the same bank that now has branches in Pennsylvania and New Jersey. The company would be allowed to take deposits and make withdrawals in any of the three states, regardless of which state a customer called home.

"It's a lot smoother, it's a lot safer, it's a lot more certain," for customers to do interstate business with one bank, as opposed to separate subsidiaries, said First Fidelity spokesman Paul J. Levine.

The plan is outlined in a proxy statement for First Fidelity's proposed $342 million acquisition of Baltimore Bancorp, parent of the Bank of Baltimore.

A shareholders meeting is scheduled for Nov. 21 in Baltimore to vote on the merger, which is worth $20.75 a share in cash.

First Fidelity performed a similar maneuver this year with its Pennsylvania subsidiary, creating one bank with branches across two state lines. If the Office of the Comptroller of the Currency (OCC) approves the company's latest request, First Fidelity would be the first in the nation with one bank operating branches across three state lines.

Mr. Levine said the OCC has indicated that "everything is moving along, and we hope to hear within the next six weeks."

Until now, all bank holding companies that operate in more than one state have had to establish separate "parent" banks in each of those states, requiring separate regulatory reports and boards of directors. Customers in one state could make withdrawals anywhere, but couldn't deposit money into a branch in another state. But a 100-year-old law, and several recent additions to it, allow banking companies to relocate their main office as many as 30 miles away, even across state lines.

Once relocated, a bank then can merge with another in the same state and operate branches seamlessly across several states.

NationsBank Corp. did its own relocation earlier this year that allowed NationsBank of Maryland to operate branches in Maryland and Washington. But it withdrew a plan to merge its Maryland bank into its Virginia subsidiary after Maryland's bank commissioner objected.

David M. Porter, Maryland's deputy bank commissioner, said his office probably won't object to the new plan.

"I don't think we're interested in maintaining a separate challenge, without the [Federal Reserve Board], because we think we'd lose," Mr. Porter said.

A Federal Reserve spokesman said he didn't have any information about the case. Currency officials could not be reached for comment.

Since the Congress passed an interstate banking law this year, First Fidelity's plans, in effect, are stopgap. The new law will allow banks to own branches in other states, without the regulatory red tape and expense of setting up distinct banks in each of those states. But the law won't take effect fully until 1997, and states have the option of rejecting interstate branching.

First Fidelity estimates it is saving almost $1 million a year in administrative expenses by not having to maintain a legal bank entity in Pennsylvania.

The savings in Maryland would be lower, because First Fidelity's Pennsylvania bank was more than four times the size of Baltimore Bancorp, which has 42 branches and $2.2 billion in assets. In all, First Fidelity has $34 billion in assets, and operations in five East Coast states.

If the OCC rejects First Fidelity's plan, the company's acquisition of Baltimore Bancorp would still proceed, assuming shareholder approval, except without the ease of interstate branching.

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