The Bank of Glen Burnie said yesterday that it has reached a settlement with Ellicott City's Commercial & Farmers Bank in a lawsuit over forged checks.

Michael P. Gavin, executive vice president and chief operating officer of the Glen Burnie bank, said the settlement stems from checks illegally endorsed by Brian H. Davis, the former trucking company executive who is now serving a 63-month sentence after pleading guilty to federal bank fraud and tax evasion charges last year.

Davis, who is incarcerated at the Federal Correctional Institution at Cumberland, pleaded guilty Tuesday to contempt of court charges stemming from fraudulent check and credit card use unrelated to the Bank of Glen Burnie.

Gavin said Davis forged endorsements on Commercial & Farmers checks made out jointly to Davis' company and another party. Davis then deposited the checks into his account at the Bank of Glen Burnie.

Commercial & Farmers had claimed in its lawsuit that Bank of Glen Burnie should have been more vigilant in cashing those checks.

Calls to Commercial & Farmers were not returned yesterday.

The amount of the settlement was not disclosed, but Gavin said his bank filed a $1.1 million claim with its insurance company that "more than covered" the settlement.

Gavin said he did not know the name of the other party to whom the checks were written.

First National Bank of Maryland and Elkridge National Bank also sued the Bank of Glen Burnie in the Circuit Court of Baltimore County in 1996 with similar claims. The amount sought in the three suits totaled $1.7 million, according to the bank's annual 10-K financial report filed with the Securities and Exchange Commission.

Elkridge National was awarded $284,000 and that amount was upheld on appeal. The Bank of Glen Burnie has filed a motion for reconsideration, Gavin said.

The Bank of Glen Burnie has also filed a counter-claim against First National.

The case is continuing, Gavin said, and his bank denies liability in all three cases.

Parent company Glen Bernie Bancorp yesterday reported that net income in the quarter ended June 30 was $230,000, or 21 cents per share, vs. $11,000, or 1 cent per share, in the corresponding period last year.

"The net income for the second quarter was mainly realized through the sale of securities," Gavin said. "The current market conditions were prime for the restructuring of our securities portfolio."

Pub Date: 8/06/98