<PAGE>
Filed Pursuant to Rule 424b(b)(2)
Registration No. 333-28479
PROSPECTUS SUPPLEMENT
(To Prospectus Dated June 17, 1997)
$100,000,000
First Maryland Bancorp
6.875% Subordinated Notes due 2009
------------
The notes will bear interest at the rate of 6.875% per year. Interest on the
notes is payable on June 1 and December 1 of each year, beginning on December
1, 1999. The notes will mature on June 1, 2009. We may not redeem the notes
prior to maturity.
------------
The notes are unsecured debt obligations of First Maryland Bancorp. They are
not deposits or other obligations of a depository institution and are not
insured by the Federal Deposit Insurance Corporation or any other governmental
agency.
------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the notes or determined if this
prospectus supplement or the related prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
------------
<TABLE>
<CAPTION>
Per Note Total
-------- -----------
<S> <C> <C>
Public Offering Price 99.615% $99,615,000
Underwriting Discount .650% $ 650,000
Proceeds to First Maryland (before expenses) 98.965% $98,965,000
</TABLE>
------------
The underwriters are offering the notes subject to various conditions. The
underwriters expect to deliver the notes to purchasers on or about June 1,
1999.
------------
Salomon Smith Barney
Bear, Stearns & Co. Inc.
J.P. Morgan & Co.
May 25, 1999
<PAGE>
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We
have not authorized anyone to provide you with different information. We are
not making an offer of the notes in any state where the offer is not
permitted. You should not assume that the information provided by this
prospectus supplement or the accompanying prospectus is accurate as of any
date other than the date on the front of this prospectus supplement.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
Prospectus Supplement
<S> <C>
First Maryland Bancorp...................................................... S-3
Use of Proceeds............................................................. S-4
Certain Terms of the Subordinated Notes..................................... S-4
Underwriting................................................................ S-8
Legal Matters............................................................... S-9
Prospectus
Available Information....................................................... 2
Incorporation of Certain Documents by Reference............................. 2
The Company................................................................. 3
Recent Events............................................................... 4
Certain Regulatory Considerations........................................... 4
Ratio of Earnings to Fixed Charges.......................................... 7
Use of Proceeds............................................................. 7
Description of Securities................................................... 7
Plan of Distribution........................................................ 13
Experts..................................................................... 14
Legal Matters............................................................... 14
</TABLE>
S-2
<PAGE>
FIRST MARYLAND BANCORP
First Maryland Bancorp ("First Maryland") is a bank holding company
headquartered in Baltimore, Maryland. At March 31, 1999, First Maryland had
consolidated total assets of $17.9 billion, total deposits of $12.2 billion,
and total stockholders' equity of $1.9 billion. Its principal subsidiary is
FMB Bank, a Maryland commercial bank. FMB Bank provides:
.comprehensive corporate, commercial, correspondent and retail banking
services;
.personal trust, corporate trust, other asset management services; and
.related financial products and services
to individuals, businesses, governmental units and financial institutions,
primarily in Maryland and the adjacent states. The assets of FMB Bank at March
31, 1999 accounted for approximately 93% of First Maryland's consolidated
total assets.
On June 28, 1999, First Maryland will change its name to Allfirst Financial,
Inc., and FMB Bank will change its name to Allfirst Bank.
Allied Irish Banks, p.l.c. ("AIB") owns 100% of the common stock, and
controls 99% of the voting power of the capital stock, of First Maryland. AIB
is an Irish banking corporation whose securities are traded on the Dublin,
London and New York Stock Exchanges, and is a registered bank holding company
under the Bank Holding Company Act of 1956, as amended. At December 31, 1998,
based upon United States generally accepted accounting principles, AIB and its
subsidiaries had total assets of approximately $63.0 billion, making it the
second largest banking corporation organized under the laws of Ireland. AIB
provides a full range of banking, financial and related services principally
in Ireland, Poland, the United Kingdom and the United States.
S-3
<PAGE>
USE OF PROCEEDS
The net proceeds from the sale of the notes are estimated to be $98,965,000.
We will use $60 million of the net proceeds to repay our outstanding 10 3/8%
Subordinated Capital Notes, which will mature on June 2, 1999. We will use the
rest of the net proceeds for general corporate purposes.
RATIO OF EARNINGS TO FIXED CHARGES
First Maryland's consolidated ratio of earnings to fixed charges for each of
the periods indicated is set forth below:
<TABLE>
<CAPTION>
Three Months
Ended
March 31, Year Ended December 31,
------------ ----------------------------
1999 1998 1997 1996 1995 1994
------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits..... 2.58x 3.25x 2.50x 2.78x 2.59x 3.16x
Including Interest on Deposits..... 1.50 1.63 1.52 1.64 1.57 1.69
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
represent net income plus applicable income taxes and fixed charges. Fixed
charges, excluding interest on deposits, represent interest expense on long-
term debt and short-term borrowings and the interest factor included in rents
(which is deemed to be one-third of rental expense). Fixed charges, including
interest on deposits, represent all interest expense and the interest factor
included in rents.
CERTAIN TERMS OF THE SUBORDINATED NOTES
We provide you with information about the terms of the notes (referred to in
the accompanying prospectus as "Offered Securities") in two documents that
progressively provide more detail--this prospectus supplement and the
accompanying prospectus. Since the terms of these notes may differ from the
general terms of the Offered Securities described in the prospectus, you
should rely on the information in this prospectus supplement over different
information in the prospectus. You should read the prospectus and this
prospectus supplement together for a complete description of the notes. Terms
that are capitalized but are not defined in this prospectus supplement have
been defined in the accompanying prospectus.
Maturity; Interest
The notes constitute a series of securities to be issued under the Indenture
referred to in the accompanying prospectus. The notes will be limited to
$100,000,000 aggregate principal amount and will mature on June 1, 2009.
The notes will bear interest at the rate per year shown on the cover page of
this prospectus supplement from June 2, 1999. The interest is payable semi-
annually in arrears on June 1 and December 1 of each year, commencing
December 1, 1999, to the persons in whose names the notes are registered at
the close of business on the preceding May 15 and November 15, as the case may
be.
The notes are not redeemable prior to maturity.
Subordination
Our obligation to make any payment on account of the principal of, premium,
if any, and interest on the notes will be subordinate and junior in right of
payment to all of our Senior Indebtedness.
S-4
<PAGE>
"Senior Indebtedness," with respect to the notes, means, whether recourse is
to all or a portion of our assets and whether or not contingent:
(i)all of our obligations for money borrowed;
(ii)all of our obligations that are evidenced by bonds, debentures, notes
or other similar instruments, including obligations incurred in connection
with the acquisition of property, assets or businesses;
(iii)all of our reimbursement obligations with respect to letters of
credit, bankers' acceptances or similar facilities issued for our account;
(iv)all of our obligations issued or assumed as the deferred purchase price
of property or services, including trade accounts payable or accrued
liabilities arising in the ordinary course of business;
(v)all of our capital lease obligations;
(vi)all of our obligations for claims (as defined in Section 101(4) of the
United States Bankruptcy Code of 1978, as amended) in respect of derivative
products such as interest and foreign exchange rate contracts, commodity
contracts and similar arrangements; and
(vii)all other obligations of the type referred to in clauses (i) through
(vi) of another person and all dividends of another person the payment of
which, in either case, we have guaranteed or for which we are responsible
or liable, directly or indirectly, as obligor or otherwise;
provided that, "Senior Indebtedness" does not include:
(w)any obligations which, by their terms, are expressly stated to rank pari
passu in right of payment with, or to not be superior in right of payment
to, the notes;
(x)any indebtedness which when incurred and without respect to any election
under Section 1111(b) of the United States Bankruptcy Code of 1978, as
amended, was without recourse to us;
(y)any indebtedness we may have to any of our subsidiaries for borrowed
money; or
(z)any indebtedness we may have to any of our employees.
The following debt will rank senior to the notes:
. our outstanding 8 3/8% Subordinated Notes due 2002 in the aggregate
principal amount of $100 million;
. our outstanding 10 3/8% Subordinated Capital Notes due 1999 in the
aggregate principal amount of $60 million; and
. our outstanding Floating Rate Junior Subordinated Debentures due 2027
and Floating Rate Junior Subordinated Debentures due 2027, Series B, in
the aggregate principal amount of $300 million
As of March 31, 1999, we had Senior Indebtedness of approximately
$829.1 million. Our subsidiaries had indebtedness and other liabilities of
approximately $14.9 billion to which the notes would also be effectively
subordinated.
No payment on account of the principal of, premium, if any, or interest in
respect of the notes may be made unless:
(i) all amounts of principal, premium, if any, sinking funds and interest
then due on all Senior Indebtedness shall have been paid in full or duly
provided for; and
(ii) at the time of such payment pursuant to the notes or immediately
thereafter, there shall not have occurred and be continuing a default in
payment with respect to Senior Indebtedness or an event of default with
respect to any Senior Indebtedness that would permit a holder thereof to
accelerate the maturity of such Senior Indebtedness.
S-5
<PAGE>
Upon any payment or distribution of assets to creditors upon any insolvency,
receivership, conservatorship, reorganization, readjustment of debt,
marshalling of assets and liabilities or similar proceedings or any
liquidation or winding-up of or relating to First Maryland as a whole, whether
voluntary or involuntary, the holders of all Senior Indebtedness will first be
entitled to receive payment in full before the Holders of the notes will be
entitled to receive any payment in respect of the principal of and premium, if
any, sinking funds and interest on the notes. In the event the Holders of
notes receive payment or distributions of our assets and all Senior
Indebtedness has not been paid in full, then such payment or distribution
shall be held in trust for the benefit of the holders of Senior Indebtedness
and shall be paid over or delivered and transferred to the holders of Senior
Indebtedness. By reason of such subordination, in the event of our insolvency,
Holders of the notes may recover less, ratably, than holders of Senior
Indebtedness.
Events of Default; Limited Rights of Acceleration
"Event of Default" means, with respect to the notes, any one of the
following events (whatever the reason and whether voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of
any court or any order, rule or regulation of any administrative or
governmental body, and whether or not occasioned by the subordination
provisions of the Indenture):
(a) a failure to pay any interest on the notes when due and payable,
continued for 30 days;
(b) a failure to pay principal of or any premium on the notes when due;
(c) our failure to perform, or our breach of, any other covenant or
agreement in the Indenture (other than a covenant included in the Indenture
solely for the benefit of a series of Securities thereunder other than the
notes) continued for 90 days after written notice as provided in the
Indenture;
(d) the entry by a court having jurisdiction in the premises: (i) of a
decree or order for relief in respect of First Maryland in an involuntary
case or proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or similar law; or (ii) of a decree or order:
. adjudging us bankrupt or insolvent; or
. approving as properly filed a petition seeking reorganization,
arrangement, adjustment or composition of or in respect of First
Maryland under any applicable Federal or state law; or
. appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of First Maryland or of any
substantial part of property; or
. ordering the winding up of our affairs
and the continuance of any such decree or order unstayed and in effect for
a period of 90 consecutive days; or
(e)(i) the commencement by First Maryland of a voluntary case or proceeding
under any applicable Federal or state bankruptcy, insolvency,
reorganization or similar law or of any other case or proceeding to be
adjudicated a bankrupt or insolvent; or
(ii) the consent by First Maryland to the entry of a decree or order for
relief in respect of First Maryland in an involuntary case or proceeding
under any applicable Federal or state bankruptcy, insolvency,
reorganization or similar law; or
(iii) the filing by First Maryland of a petition or answer or consent
seeking reorganization or relief under any applicable Federal or state law.
If an Event of Default described in clause (a), (b) and/or (c), above,
occurs and is continuing, then there will be no right of acceleration of the
payment of principal of the notes. In such event, the Trustee, subject to
certain limitations and conditions, may institute judicial proceedings to
enforce payment of the overdue principal, premium, if any, or interest, or to
obtain the performance of such covenant or agreement, or to enforce any other
proper remedy. If an Event of Default described in clause (d) or (e), above,
occurs and is continuing, then the Trustee or the Holders of not less than 25%
in aggregate principal amount of the notes outstanding may, or the Trustee if
so directed by such Holders shall, declare the principal of the notes to be
due and payable immediately.
S-6
<PAGE>
At any time after a declaration of acceleration with respect to the notes
has been made, but before a judgment or decree based on acceleration has been
obtained, the Holders of a majority in aggregate principal amount of the notes
may, under certain circumstances, rescind and annul such acceleration.
Under certain circumstances, the Trustee may withhold notice to the Holders
of the notes in a default if the Trustee in good faith determines that the
withholding of such notice is in the best interest of such Holders, and the
Trustee shall withhold such notice for certain defaults for a period of 30
days.
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under
no obligation to exercise any of its rights or powers under the Indenture at
the request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable security or indemnity. Subject to such
provisions for the indemnification of the Trustee and to certain other
conditions, the Holders of a majority in aggregate principal amount of the
notes will have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee, or exercising any
trust or power conferred on the Trustee, with respect to the notes.
No Holder of notes will have any right to institute any proceeding with
respect to the Indenture, or for the appointment of a receiver or trustee or
for any remedy thereunder, unless:
(i) such Holder shall have previously given to the Trustee written notice
of a continuing Event of Default; and
(ii) unless the Holders of at least 25% in aggregate principal amount of
the notes shall have made written request, and offered reasonable
indemnity, to the Trustee to institute such proceeding as trustee, and the
Trustee shall not have received from the Holders of a majority in aggregate
principal amount of the notes a direction inconsistent with such request
and shall have failed to institute such proceeding within 60 days.
However, such limitations do not apply to a suit instituted by a Holder of a
notes for enforcement of payment of the principal of, premium, if any, or
interest on such notes on or after the respective due dates expressed in such
notes.
We are required to furnish to the Trustee annually a statement as to our
performance of certain of our obligations under the Indenture and as to any
default in such performance.
Book-Entry System
The notes will be issued in the form of one or more fully registered global
securities, which will be deposited with, or on behalf of, The Depository
Trust Company, New York, New York ("DTC"), and registered in the name of DTC's
nominee. The term "Depositary" refers to DTC or any successor depositary. As a
result, except as set forth in the accompanying Prospectus, the notes may be
transferred, in whole or in part, only to another nominee of DTC or to a
successor of DTC or its nominee.
DTC has advised us that DTC is:
.a limited purpose trust company organized under the laws of the State of
New York, a "banking organization" within the meaning of the New York
Banking Law;
.a member of the Federal Reserve System;
.a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
.a "clearing agency" registered under the Exchange Act.
DTC was created to hold securities of its participants and to facilitate the
clearance and settlement of securities transactions among its participants in
such securities through electronic book-entry changes in accounts of the
participants, thereby eliminating the need for physical movement of securities
certificates. DTC's participants include securities brokers and dealers,
banks, trust companies, clearing corporations and certain other organizations.
DTC is owned by a number of its participants and by the New York Stock
Exchange, Inc., the American Stock Exchange, Inc. and the National Association
of Securities Dealers, Inc. Access to DTC's book-
S-7
<PAGE>
entry system is also available to others, such as banks, brokers, dealers and
trust companies that clear through or maintain a custodial relationship with a
participant, either directly or indirectly. The rules applicable to DTC and
its participants are on file with the Securities and Exchange Commission.
We understand that, under existing industry practices, in the event that we
request any action of Holders, or an owner of a beneficial interest in a
global notes desires to give or take any action that a Holder is entitled to
give or take under the Indenture, DTC would authorize the participants holding
the relevant beneficial interests to give or take such action, and such
participants would authorize beneficial owners owning through such
participants to give or take such action or would otherwise act upon the
instructions of beneficial owners owning through them. See "Description of
Securities--Global Securities" in the accompanying Prospectus.
Same-Day Settlement and Payment
Settlement for the notes will be made in immediately available funds. So
long as the notes are represented by one or more global notes, we will make
all payments of principal and interest in immediately available funds.
So long as the notes are represented by one or more global notes registered
in the name of the Depositary or its nominee, the notes will trade in the
Depositary's Same-Day Funds Settlement System. As a result, the Depositary
will require that secondary market trading activity be settled in immediately
available funds. No assurance can be given as to the effect, if any, of
settlement in immediately available funds on the trading activity in the
notes.
UNDERWRITING
Subject to the terms and conditions stated in the underwriting agreement,
dated the date hereof, between First Maryland and the underwriters, each
underwriter named below has severally agreed to purchase, and First Maryland
has agreed to sell to such underwriter, the principal amount of notes set
forth opposite the name of such underwriter:
<TABLE>
<CAPTION>
Principal
Amount
Underwriter Name of Notes
---------------- ------------
<S> <C>
Salomon Smith Barney Inc. ..................................... $ 33,333,334
Bear, Stearns & Co. Inc. ...................................... 33,333,333
J.P. Morgan Securities Inc..................................... 33,333,333
------------
Total........................................................ $100,000,000
============
</TABLE>
The underwriting agreement provides that the obligations of the several
underwriters to purchase the notes included in this offering are subject to
approval of certain legal matters by counsel and to certain other conditions.
The underwriters are obligated to purchase all of the notes if they purchase
any of the notes.
We expect that delivery of the notes will be made against payment therefor
on or about June 1, 1999, which is the fourth business day after the pricing
of the notes. Under Rule 15c6-1 of the Securities Exchange Act of 1934, trades
in the secondary market generally are required to settle in three business
days, unless the parties to any such trade expressly agree otherwise.
Accordingly, if you wish to trade notes prior to June 1, 1999, you will be
required to specify alternate settlement arrangements in order to prevent a
failed settlement.
The underwriters, for whom Salomon Smith Barney Inc., Bear, Stearns & Co.
Inc. and J.P. Morgan Securities Inc. are acting as representatives, propose to
offer some of the notes directly to the public at the public offering price
set forth on the cover page of this prospectus supplement and some of the
notes to certain dealers at the public offering price less a concession not in
excess of .4% of the principal amount of the notes. The underwriters may
allow, and such dealers may re-allow, a concession not in excess of .25% of
the principal amount of the notes on sales to certain other dealers. After the
initial offering of notes to the public, the public offering price and such
concessions may be changed by the representatives.
The following table shows the underwriting discounts and commissions to be
paid to the underwriters by First Maryland in connection with this offering
(expressed as a percentage of the principal amount of the notes):
<TABLE>
<CAPTION>
Paid by First Maryland
----------------------
<S> <C>
Per note.............................................. .650%
</TABLE>
S-8
<PAGE>
In connection with the offering, Salomon Smith Barney Inc., on behalf of the
underwriters, may purchase and sell notes in the open market. These
transactions may include over-allotment, syndicate covering transactions and
stabilizing transactions. Over-allotment involves syndicate sales of notes in
excess of the principal amount of the notes to be purchased by the
underwriters in the offering, which creates a syndicate short position.
Syndicate covering transactions involve purchases of the notes in the open
market after the distribution has been completed in order to cover syndicate
short positions. Stabilizing transactions consist of certain bids or purchases
of notes made for the purpose of preventing or retarding a decline in the
market price of the notes while the offering is in progress.
The underwriters may also impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when
Salomon Smith Barney Inc., in covering syndicate short positions or making
stabilizing purchases, repurchases notes originally sold by that syndicate
member.
Any of these activities may cause the price of the notes to be higher than
the price that would otherwise exist in the open market in the absence of such
transactions. These transactions may be effected in the over-the-counter
market or otherwise and, if commenced, may be discontinued at any time.
First Maryland estimates that its total expenses of the offering of the
notes will be $100,000.
The representatives and/or certain of their affiliates have performed
certain investment banking, commercial banking and/or advisory services for
First Maryland from time to time, for which they have received customary fees
and expenses. The representatives may from time to time engage in transactions
with, and perform services for, First Maryland in the ordinary course of their
respective businesses.
First Maryland has agreed to indemnify the underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, or to
contribute to payments the underwriters may be required to make in respect of
any of those liabilities.
The notes will not be listed on any securities exchange. The notes are a new
series of securities with no established trading market. The underwriters have
advised us that they intend to make a market in the notes, but are not
obligated to do so, and may discontinue market making at any time in their
sole discretion without notice. Therefore, no assurance can be given as to the
liquidity of the trading market for the notes.
LEGAL MATTERS
The validity of the notes offered hereby will be passed upon for First
Maryland by Gregory K. Thoreson, Senior Vice President and General Counsel of
First Maryland, and for the Underwriters by Simpson Thacher & Bartlett, New
York, New York. As to matters of Maryland law, Simpson Thacher & Bartlett will
rely on the opinion of Mr. Thoreson.
S-9
<PAGE>
PROSPECTUS
First Maryland Bancorp
Subordinated Debt Securities
First Maryland may from time to time offer up to $350,000,000 aggregate
principal amount of Subordinated Debt Securities consisting of debentures,
notes and/or other unsecured evidences of indebtedness in one or more series.
The Subordinated Debt Securities may be offered as separate series in amounts,
at prices and on terms to be determined at the time of sale. A Prospectus
Supplement to this Prospectus, which will be delivered together with this
Prospectus, will set forth the particular terms of the Subordinated Debt
Securities to be issued, including, where applicable, the title, aggregate
principal amount, denominations, maturity, rate, if any (which may be fixed or
variable), and time of payment of any interest, any terms for redemption at
the option of First Maryland or the holder, any terms for sinking fund
payments, any listing on a securities exchange and the initial public offering
price and any other terms in connection with the offering and sale of such
series of Subordinated Debt Securities.
The Subordinated Debt Securities will be unsecured obligations of First
Maryland, will not be savings accounts, deposits or other obligations of any
bank or nonbank subsidiary of First Maryland and will not be insured by the
Federal Deposit Insurance Corporation, the Bank Insurance Fund or any other
government agency.
First Maryland may sell Subordinated Debt Securities to or through
underwriters, and also may sell Subordinated Debt Securities directly to other
purchasers or through agents. See "Plan of Distribution". The accompanying
Prospectus Supplement will also set forth the names of any underwriters or
agents involved in the sale of the Subordinated Debt Securities in respect of
which this Prospectus is being delivered, the principal amounts, if any, to be
purchased by underwriters and the compensation, if any, of such underwriters
or agents.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
THIS PROSPECTUS MAY NOT BE USED TO CONSUMMATE SALES OF SECURITIES UNLESS
ACCOMPANIED BY A PROSPECTUS SUPPLEMENT
----------------
The date of this Prospectus is June 17, 1997.
<PAGE>
AVAILABLE INFORMATION
First Maryland Bancorp (the "Company") is subject to the informational
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, information statements and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports, information statements and other information can
be inspected and copied at the public reference facilities of the Commission,
at Room 1024, 450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549,
and at the Commission's Regional Offices in New York at 7 World Trade Center,
Suite 1300, 13th Floor, New York, New York 10048 and in Chicago at Suite 1400,
Citicorp Center, 500 West Madison Street, 14th Floor, Chicago, Illinois 60661-
2511. Copies of such material can be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Judiciary Plaza,
Washington, D.C. 20549, at prescribed rates. The Commission also maintains a
Web site (http://www.sec.gov) that contains reports, information statements
and other information regarding First Maryland.
This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all exhibits thereto, the "Registration Statement") filed by
First Maryland with the Commission under the Securities Act of 1933, as
amended (the "Securities Act"). This Prospectus does not contain all the
information set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the Commission,
and reference is hereby made to the Registration Statement for further
information with respect to First Maryland and the Securities. Any statements
contained herein concerning the provisions of any document are not necessarily
complete, and, in each instance, reference is made to the copy of such
document filed as an exhibit to the Registration Statement or otherwise filed
with the Commission. Each such statement is qualified in its entirety by such
reference. First Maryland's 7.875% Noncumulative Preferred Stock, Series A, is
listed on the New York Stock Exchange. Reports and other information
concerning First Maryland can also be inspected at the offices of the New York
Stock Exchange, 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
First Maryland hereby incorporates by reference in this Prospectus the
following reports previously filed with the Commission (File No. 1-7273)
pursuant to Section 13 of the Exchange Act: (a) First Maryland's Annual Report
on Form 10-K for the year ended December 31, 1996; (b) First Maryland's
Quarterly Report on Form 10-Q for the quarter ended March 31, 1997; and (c)
First Maryland's Current Reports on Form 8-K dated January 21, 1997, February
3, 1997, March 5, 1997 and May 21, 1997. All documents filed by First Maryland
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent
to the date of this Prospectus and prior to the termination of the offering of
the Securities offered hereby shall be deemed to be incorporated by reference
into this Prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed
to be incorporated by reference herein modifies or supersedes such statement.
Any such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of the Registration Statement or
this Prospectus.
First Maryland will provide without charge to each person, including any
beneficial owner, to whom this Prospectus is delivered, upon the written or
oral request of any such person, a copy of any or all of the documents
incorporated herein by reference (other than exhibits to such documents which
are not specifically incorporated by reference in such documents). Written
requests for such copies should be directed to First Maryland Bancorp, 25
South Charles Street, Baltimore, Maryland 21201, Attention: James A. Smith.
Telephone requests may be directed to (410) 545-2100.
2
<PAGE>
THE COMPANY
First Maryland is a Maryland corporation incorporated in 1973 and is
registered as a bank holding company under the Bank Holding Company Act of
1956, as amended (the "Bank Holding Company Act"). At March 31, 1997, First
Maryland had consolidated total assets of $11.2 billion, total deposits of
$7.6 billion, and total stockholders' equity of $1.3 billion. Its principal
subsidiaries are The First National Bank of Maryland ("First National"), First
Omni Bank, N. A. ("First Omni") and The York Bank and Trust Company ("York
Bank"). These banks provide comprehensive corporate, commercial, correspondent
and retail banking services, personal and corporate trust services and related
financial products and services to individuals, businesses, governmental units
and financial institutions primarily in Maryland and the adjacent states. The
assets of these banks at March 31, 1997 accounted for approximately 96% of
First Maryland's consolidated total assets.
Allied Irish Banks, p.l.c. ("AIB") owns 100% of the common stock, and
controls 99% of the voting power of the capital stock, of First Maryland. AIB
is an Irish banking corporation whose securities are traded on the Dublin,
London and New York Stock Exchanges, and is a registered bank holding company
under the Bank Holding Company Act. At December 31, 1996, based upon United
States generally accepted accounting principles, AIB and its subsidiaries
(collectively, "AIB Group") had total assets of approximately $43.7 billion,
making it the largest banking corporation organized under the laws of Ireland.
AIB Group provides a full range of banking, financial and related services
principally in Ireland, the United States and the United Kingdom.
First National, First Maryland's largest subsidiary, is a national banking
association chartered under the laws of the United States. It commenced
operations in Baltimore, Maryland on July 10, 1865 and is the successor to a
Maryland banking institution founded in 1806. At March 31, 1997, First
National was the second largest commercial bank headquartered in Maryland in
terms of assets, loans and deposits, with assets of $9.3 billion, net loans of
$5.3 billion, and deposits of $7.1 billion. Its assets at such date comprised
approximately 83% of the consolidated assets of First Maryland. Including its
main office, First National operates 211 banking facilities in Maryland, the
District of Columbia and Virginia, including 159 full service offices, and
loan production offices in Washington, D.C., Easton, Maryland, and York,
Pennsylvania. It conducts international activities at its Baltimore
headquarters, a Cayman Islands branch and a representative office in London,
and maintains correspondent accounts with approximately 54 foreign banks.
First National offers investment, foreign exchange and securities brokerage
services, operates a brokerage subsidiary and, through a subsidiary, acts as
investment adviser to the ARK Funds, a family of proprietary mutual funds.
York Bank was acquired by First Maryland on December 31, 1991. It is a
Pennsylvania chartered commercial bank organized in 1960 as the product of a
consolidation of two banks chartered in 1810 and 1890. At March 31, 1997, York
Bank had assets of $1.1 billion, net loans of $675.1 million and deposits of
$887.9 million. York Bank operates 37 banking facilities, including 35 full
service offices in south central Pennsylvania. It is the largest banking
institution headquartered in York County, Pennsylvania, a market contiguous
with First National's principal market.
First Omni is a national banking subsidiary of First Maryland headquartered
in Millsboro, Delaware, which conducts retail bankcard services. It offers
MasterCard(R) and VISA(R) bankcards both directly and as agent for other
banks. At March 31, 1997, it managed bankcard receivables of $1.0 billion
(including $500 million of securitized bankcard receivables).
First Maryland operates various other subsidiaries, including First National
Mortgage Corporation, a mortgage banking company which originates, sells and
services residential mortgage loans through its network of offices in
Maryland, Virginia, Pennsylvania, Kentucky, Tennessee and Mississippi; First
Maryland Leasecorp, a commercial finance company specializing in equipment
financing; and First Maryland Mortgage Corporation, a commercial real estate
lender.
First Maryland has its principal executive office at 25 S. Charles Street,
Baltimore, Maryland 21201, telephone number (410) 244-4000.
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RECENT EVENTS
On January 21, 1997, First Maryland, AIB and Dauphin Deposit Corporation
("Dauphin") entered into a definitive Agreement and Plan of Merger (the
"Merger Agreement") pursuant to which AIB and First Maryland will acquire
Dauphin. In the Merger (defined below), Dauphin shareholders will receive cash
and AIB American Depository Shares ("AIB ADSs") having an aggregate value of
approximately $1.36 billion based on the market price of AIB ADSs on January
21, 1997. Dauphin is headquartered in Harrisburg, Pennsylvania and, through
its bank and nonbank subsidiaries, provides corporate, commercial,
correspondent and retail banking services, personal and corporate trust
services and related financial products and services to individuals,
businesses, governmental units and financial institutions, primarily in south-
central Pennsylvania. At March 31, 1997, Dauphin had consolidated total assets
of $5.8 billion, total deposits of $4.1 billion and total stockholders' equity
of $573.4 million.
Under the Merger Agreement, (i) Dauphin will merge into First Maryland (the
"Merger") and (ii) shareholders of Dauphin will receive per share of Dauphin
common stock either (a) $43.00 in cash or (b) that number (the "Exchange
Ratio") of AIB ADSs having a Closing Market Price (as defined below) of
$43.00, at each holder's election, but subject to certain limitations
described in the following sentences. If the Closing Market Price of an AIB
ADS shortly before the effective time of the Merger is below $37.00, then the
Exchange Ratio will equal 1.1620, and if the Closing Market Price is more than
$43.00, then the Exchange Ratio will be 1.0000. If the market price of an AIB
ADS as measured during a period shortly before the effective time of the
Merger is below $32.00, then Dauphin has the right to terminate the Merger
Agreement unless AIB adjusts the Exchange Ratio such that the value of the AIB
ADSs to be received by holders of Dauphin Common Stock is not less than
$37.19. "Closing Market Price" means the average closing price of the AIB ADSs
on the New York Stock Exchange for the ten New York Stock Exchange trading
days ending on the fifth business day prior to the closing date of the Merger.
At least 51% of the outstanding shares of Dauphin Common Stock must be
converted into AIB ADSs. If an insufficient number of Dauphin shareholders
elect to receive AIB ADSs, then a shareholder who elects to receive all cash
may have some or all of his shares converted into AIB ADSs. A shareholder who
makes no election may receive cash or AIB ADSs, in the discretion of AIB.
Consummation of the transaction is subject to, among other things, receipt
of regulatory approvals from the Board of Governors of the Federal Reserve
System (the "Federal Reserve Board"), the Minister for Enterprise and
Employment of Ireland and the Central Bank of Ireland, and approval by the
shareholders of Dauphin and AIB. On May 19, 1997, the Federal Reserve Board
approved AIB's application to acquire Dauphin. On May 20, 1997, the
shareholders of Dauphin approved the Merger and on May 21, 1997, the
shareholders of AIB approved the acquisition of Dauphin, in each case by more
than the requisite percentage under applicable law. Consummation of the
transaction is expected to occur during the third quarter of 1997. Reference
is made to the Merger Agreement for additional information concerning the
Merger.
CERTAIN REGULATORY CONSIDERATIONS
General
As a bank holding company, First Maryland is subject to the regulation and
supervision of the Federal Reserve Board. First National and First Omni, as
national banking associations, are subject to supervision and examination by
the Office of the Comptroller of the Currency (the "Comptroller"), and York
Bank is subject to supervision and examination by the Pennsylvania Department
of Banking and the Federal Deposit Insurance Company (the "FDIC"). First
National, First Omni and York Bank (the "Subsidiary Banks") are also subject
to various requirements and restrictions, including requirements to maintain
reserves against deposits, restrictions on the types and amounts of loans that
may be granted and the interest that may be charged thereon, and limitations
on the types of investments that may be made and the types of services that
may be offered. Various consumer laws and regulations also affect the
operations of the Subsidiary Banks. In addition to the impact of
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regulation, commercial banks are affected significantly by the actions of the
Federal Reserve Board as it attempts to control the money supply and credit
availability in order to influence the economy.
The federal banking agencies have broad enforcement powers over depository
institutions, including the power to terminate deposit insurance, to impose
substantial fines and other civil and criminal penalties, and to appoint a
conservator or receiver if any of a number of conditions are met. The federal
banking agencies also have broad enforcement powers over bank holding
companies, including the power to impose substantial fines and other civil and
criminal penalties.
Almost every aspect of the operations and financial condition of the
Subsidiary Banks is subject to extensive regulation and supervision and to
various requirements and restrictions under federal and state law, including
requirements governing capital adequacy, liquidity, earnings, dividends,
reserves against deposits, management practices, branching, loans, investments
and the provision of services. The activities and operations of First Maryland
also are subject to extensive federal supervision and regulation which, among
other things, limit non-banking activities, impose minimum capital
requirements and require approval to acquire 5% of any class of voting shares
or substantially all of the assets of a bank or other company. In addition to
the impact of regulation, banks and bank holding companies may be
significantly affected by legislation, which can change banking statutes in
substantial and unpredictable ways, and by the actions of the Federal Reserve
Board as it attempts to control the money supply and credit availability in
order to influence the economy.
Payment of Dividends and Other Restrictions
First Maryland is a legal entity separate and distinct from its
subsidiaries, including the Subsidiary Banks. Accordingly, the right of First
Maryland, and thus the rights of First Maryland's creditors, to participate in
any distribution of the assets or earnings of any subsidiary other than in
First Maryland's capacity as a bona fide creditor of the subsidiary is
necessarily subject to the prior satisfaction of claims of creditors of the
subsidiary.
There are various legal and regulatory limitations on the extent to which
First Maryland's subsidiaries, including its bank subsidiaries, can finance or
otherwise supply funds to First Maryland. The principal source of First
Maryland's cash revenues is dividends from its subsidiaries and there are
certain legal restrictions under federal and state law on the payment of
dividends by such subsidiaries. The prior approval of the Comptroller is
required if the total of all dividends declared by any national banking
association in any calendar year exceeds the bank's net income for that year
combined with its retained net income for the preceding two calendar years,
less any required transfers to surplus or a fund for the retirement of any
preferred stock. In addition, a dividend may not be paid in excess of a bank's
"undivided profits then on hand." The relevant regulatory agencies also have
authority to prohibit a bank holding company or a national banking association
from engaging in what, in the opinion of such regulatory body, constitutes an
unsafe or unsound practice in conducting its business. The payment of
dividends could, depending upon the financial condition of the subsidiary, be
deemed to constitute such an unsafe or unsound practice. In addition, the
Subsidiary Banks and their subsidiaries are subject to limitations under
Section 23A of the Federal Reserve Act with respect to extensions of credit
to, investments in, and certain other transactions with, First Maryland and
its other subsidiaries. Furthermore, loans and extensions of credit are also
subject to various collateral requirements.
Capital Adequacy
The federal bank regulatory agencies have adopted minimum risk-based and
leverage capital guidelines for United States banking organizations. The
minimum required risk-based capital ratio of qualifying total capital to risk-
weighted assets (including certain off-balance-sheet items, such as standby
letters of credit) is 8%, of which 4% must consist of Tier 1 capital. At March
31, 1997, First Maryland had a Tier 1 capital to risk-adjusted assets ratio of
15.71% and a total capital ratio of 18.75%. The minimum required leverage
capital ratio (Tier 1 capital to average total assets) is 3% for banking
organizations that meet certain specified criteria, including that they have
the highest regulatory rating. A higher leverage ratio may apply under certain
circumstances. At March 31, 1997, First Maryland's leverage capital ratio was
13.68%. Neither First Maryland nor any Subsidiary Bank has been advised by the
appropriate federal regulatory agency of any specific leverage ratio
applicable to it.
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Failure to meet capital guidelines can subject a banking organization to a
variety of enforcement remedies, including additional substantial restrictions
on its operations and activities, termination of deposit insurance by the
FDIC, and under certain conditions the appointment of a receiver or
conservator. Federal banking statutes establish five capital categories for
depository institutions ("well capitalized," "adequately capitalized,"
"undercapitalized," "significantly undercapitalized" and "critically
undercapitalized"), and impose significant restrictions on the operations of
an institution that is not at least adequately capitalized. Under certain
circumstances, an institution may be downgraded to a category lower than that
warranted by its capital levels, and subjected to the supervisory restrictions
applicable to institutions in the lower capital category. A depository
institution is generally prohibited from making capital distributions
(including paying dividends) or paying management fees to a holding company if
the institution would thereafter be undercapitalized. Adequately capitalized
institutions may accept brokered deposits only with a waiver from the FDIC,
while undercapitalized institutions may not accept, renew, or roll over
brokered deposits.
An undercapitalized depository institution is also subject to restrictions
in a number of areas, including asset growth, acquisitions, branching, new
lines of business, and borrowing from the Federal Reserve System. In addition,
an undercapitalized depository institution is required to submit a capital
restoration plan. A depository institution's holding company must guarantee
the capital plan up to an amount equal to the lesser of 5% of the depository
institution's assets at the time it becomes undercapitalized or the amount
needed to restore the capital of the institution to the levels required for
the institution to be classified as adequately capitalized at the time the
institution fails to comply with the plan and any such guarantee would be
entitled to a priority of payment in bankruptcy. A depository institution is
treated as if it is significantly undercapitalized if it fails to submit a
capital plan that is based on realistic assumptions and is likely to succeed
in restoring the depository institution's capital. Significantly
undercapitalized depository institutions may be subject to a number of
additional significant requirements and restrictions, including requirements
to sell sufficient voting stock to become adequately capitalized, to replace
or improve management, to reduce total assets, to cease acceptance of
correspondent bank deposits, to restrict senior executive compensation and to
limit transactions with affiliates. Critically undercapitalized depository
institutions are further subject to restrictions on paying principal or
interest on subordinated debt, making investments, expanding, acquiring or
selling assets, extending credit for highly-leveraged transactions, paying
excessive compensation, amending their charters or bylaws and making any
material changes in accounting methods. In general, a receiver or conservator
must be appointed for a depository institution within 90 days after the
institution is deemed to be critically undercapitalized.
Support of Subsidiary Banks
Under Federal Reserve Board policy, First Maryland is expected to act as a
source of financial strength to, and to commit resources to support, each of
the Subsidiary Banks. This support may be required at times when, absent such
Federal Reserve Board policy, First Maryland may not have the resources to
provide it. Any capital loan by First Maryland to a Subsidiary Bank would be
subordinate in right of payment to deposits and certain other indebtedness of
the Subsidiary Bank. In the event of a bank holding company's bankruptcy, any
commitment by the bank holding company to a federal bank regulatory agency to
maintain the capital of a subsidiary bank will be assumed by the bankruptcy
trustee and entitled to a priority of payment.
A depository institution insured by the FDIC can be held liable for any loss
incurred by, or reasonably expected to be incurred by, the FDIC in connection
with the default of a commonly controlled FDIC-insured depository institution
or any assistance provided by the FDIC to any commonly controlled, FDIC-
insured depository institution "in danger of default". "Default" is defined
generally as the appointment of a conservator or receiver and "in danger of
default" is defined generally as the existence of certain conditions
indicating that a default is likely to occur in the absence of regulatory
assistance. Liability for the losses of commonly-controlled depository
institutions can lead to the failure of some or all depository institutions in
a holding company structure, if the remaining institutions are unable to pay
the liability assessed by the FDIC. Any obligation or liability owed by a
subsidiary bank to its parent company is subordinate to the subsidiary bank's
cross-guarantee liability for losses of commonly-controlled depository
institutions.
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RATIO OF EARNINGS TO FIXED CHARGES
First Maryland's consolidated ratio of earnings to fixed charges for each of
the periods indicated is set forth below:
<TABLE>
<CAPTION>
Three Months
Ended Years Ended December 31,
March 31, ----------------------------
1997 1996 1995 1994 1993 1992
------------ ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Earnings to Fixed Charges:
Excluding Interest on Deposits..... 2.70x 2.78x 2.59x 3.16x 3.55x 3.22x
Including Interest on Deposits..... 1.65 1.64 1.57 1.69 1.73 1.49
</TABLE>
For purposes of computing the ratio of earnings to fixed charges, earnings
represent net income plus applicable income taxes and fixed charges. Fixed
charges, excluding interest on deposits, represent interest expense on long-
term debt and short-term borrowings and the interest factor included in rents
(which is deemed to be one-third of rental expense). Fixed charges, including
interest on deposits, represent all interest expense and the interest factor
included in rents.
USE OF PROCEEDS
Unless otherwise indicated in the applicable Prospectus Supplement (each, a
"Prospectus Supplement") setting forth the particular terms of the
Subordinated Debt Securities (the "Securities") to be offered, the net
proceeds from the sale of the Securities will be used for general corporate
purposes, principally to fund investments in, or extensions of credit to,
First Maryland's banking and nonbanking subsidiaries, including to allow its
subsidiaries to repay borrowings incurred by such subsidiaries. The precise
amount and timing of such investments in and extensions of credit to the
subsidiaries will depend upon their funding requirements and the availability
of other funds to First Maryland and its subsidiaries. If the Merger is
consummated, First Maryland may use all or a portion of the net proceeds from
one or more series of Securities to pay all or a portion of the cash
consideration payable in the Merger. In addition to the foregoing, First
Maryland may also use a portion of the net proceeds to fund possible
acquisitions if suitable opportunities develop in the future.
DESCRIPTION OF SECURITIES
The following sets forth certain general terms and provisions of the
Securities offered hereby. The particular terms of the Securities offered by
any Prospectus Supplement (the "Offered Securities") will be described in the
Prospectus Supplement relating to such Offered Securities. The Securities will
be issued under an Indenture, dated as of May 15, 1992 (the "Indenture"),
between First Maryland and Bankers Trust Company, as trustee (the "Trustee").
A copy of the Indenture is included as an exhibit to the Registration
Statement of which this Prospectus is a part.
General
The following summaries of certain provisions of the Securities and the
Indenture do not purport to be complete and are subject to, and are qualified
in their entirety by reference to, all the provisions of the Indenture,
including the definitions therein of certain terms. Wherever particular
Sections, Articles or defined terms of the Indenture is referred to, it is
intended that such Sections, Articles or defined terms shall be incorporated
herein by reference. Article and Section references used herein are references
to the Indenture. Capitalized terms not otherwise defined in this Prospectus
shall have the meanings given to them in the Indenture.
The Securities will be unsecured and will be subordinated and junior to all
Senior Indebtedness (as defined below under "Subordination of Securities").
The Indenture does not contain covenants prohibiting First Maryland from
disposing of voting stock of its subsidiaries, including the stock of any of
its banking subsidiaries.
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The Indenture does not limit the amount of Securities that may be issued
thereunder and provides that Securities may be issued thereunder from time to
time in one or more series (Section 3.1). Neither the Indenture nor the
Securities will limit or otherwise restrict the amount of other indebtedness
which may be incurred by First Maryland or any of its subsidiaries. In
addition, the Indenture and the Securities will not contain any provision that
would require First Maryland to repurchase or redeem or otherwise modify the
terms of the Securities upon a change in control or other events involving
First Maryland that may adversely affect the credit quality of First Maryland.
Because First Maryland is a holding company, its rights and the rights of its
creditors, including the holders of the Securities, to participate in the
assets or earnings of any subsidiary upon the liquidation or reorganization of
such a subsidiary will be subject to the prior claims of such subsidiaries'
creditors (including, in the case of a Subsidiary Bank, its depositors) except
to the extent that First Maryland may itself be a bona fide creditor of the
subsidiary. Claims on subsidiaries of First Maryland by creditors other than
First Maryland include claims with respect to long-term debt and substantial
obligations with respect to deposit liabilities, federal funds purchased,
securities sold under repurchase agreements and other short-term borrowings.
Unless otherwise indicated in the Prospectus Supplement relating to the
Offered Securities, principal of and premium, if any, and interest on the
Securities will be payable at the office or agency of the Trustee maintained
for such purpose in New York, New York, and at any other office or agency
maintained by First Maryland for such purposes, except that, at the option of
First Maryland, interest may be paid by mailing a check to the address of the
person entitled thereto as it appears on the Security Register. The transfer
of Securities (other than Book-Entry Securities) will be registrable for each
series of Securities at the corporate trust office of the Trustee. The
corporate trust offices of the Trustee are located in New York, New York.
Interest on the Securities will be payable to the person in whose name the
Securities are registered at the close of business on the Regular Record Date
designated for an Interest Payment Date (Section 3.7). If issued in
certificated form, the Securities will be issued only in fully registered form
without coupons and, unless otherwise indicated in the applicable Prospectus
Supplement, in denominations of $1,000 or integral multiples thereof (Section
3.2). No service charge will be required for any registration of transfer or
exchange of the Securities, but First Maryland may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith other than certain exchanges not involving any transfer (Section
3.5).
The applicable Prospectus Supplement will describe the following terms of
the Offered Securities: (a) the title of the Offered Securities; (b) any limit
on the aggregate principal amount of the Offered Securities; (c) the date or
dates on which the Offered Securities will mature; (d) the rate or rates
(which may be fixed or variable) per annum at which the Offered Securities
will bear interest, if any, the date or dates from which such interest, if
any, will accrue, the dates on which such interest, if any, will be payable
and the Regular Record Dates for such Interest Payment Dates; (e) the place or
places, if any, in addition to the office or agency of the Trustee, where the
principal of and premium, if any, and interest on the Offered Securities will
be payable; (f) the period or periods within which, the price or prices at
which and the terms and conditions upon which the Offered Securities may be
redeemed, in whole or in part, at the option of First Maryland; (g) the
obligation, if any, of First Maryland to redeem or purchase the Offered
Securities pursuant to any sinking fund or analogous provisions or at the
option of a Holder thereof and the period or periods within which, the price
or prices at which and the terms and conditions upon which Offered Securities
shall be redeemed or purchased, in whole or in part, pursuant to such
obligation; (h) if other than denominations of $1,000 and any integral
multiple thereof, the denominations in which the Offered Securities will be
issuable; (i) the currency or currency unit of payment of principal of and
premium, if any, and interest on the Offered Securities if other than the
currency of the United States of America; (j) any index used to determine the
amount of payment of principal of, premium, if any, or interest on the Offered
Securities; (k) if other than the principal amount thereof, the portion of the
principal amount of the Offered Securities which will be payable upon the
declaration of acceleration of the Maturity thereof; (l) if the Offered
Securities are Global Securities, information with respect to book-entry
procedures, if any; (m) any other terms of the Offered Securities (Section
3.1); and (n) if applicable, a discussion of certain United States federal
income tax consequences.
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Securities may be issued as Original Issue Discount Securities to be offered
and sold at a substantial discount below their stated principal amount.
"Original Issue Discount Security" means any security which provides for an
amount less than the principal amount thereof to be due and payable upon the
declaration of acceleration of the Maturity thereof upon the occurrence of an
Event of Default and the continuation thereof. (Section 1.1)
Global Securities
The Securities of a series may be issued in the form of one or more book-
entry securities in global form ("Global Securities") that will be deposited
with a Depositary or its nominee identified in the applicable Prospectus
Supplement (Section 3.1). In such a case, one or more Global Securities will
be issued in a denomination or aggregate denominations equal to the portion of
the aggregate principal amount of Outstanding Securities of the series to be
represented by such Global Security or Securities. Unless and until it is
exchanged in whole or in part for Securities in definitive registered form, a
Global Security may not be transferred except as a whole by the Depositary for
such Global Security to a nominee of such Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by the
Depositary or any such nominee to a successor of the Depositary or a nominee
of such successor. The specific terms of the depositary arrangement with
respect to any portion of a series of Securities to be represented by a Global
Security will be described in the applicable Prospectus Supplement.
First Maryland anticipates that the following provisions will apply to all
depositary arrangements. Upon the issuance of a Global Security, the
designated Depositary or its nominee will credit, on its book-entry
registration and transfer system, the respective principal amounts of the
Securities represented by such Global Security to the accounts of persons that
have accounts with such Depositary ("participants"). Such accounts shall be
designated by the underwriters or agents with respect to such Securities or by
First Maryland if such Securities are offered and sold directly by First
Maryland. Participants include securities brokers and dealers, banks and trust
companies, clearing corporations and certain other organizations. Access to
the Depositary's system is also available to others, such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants"). Persons who are not participants may beneficially own Global
Securities held by the Depositary only through participants or indirect
participants.
Ownership of beneficial interests in any Global Security will be shown on,
and the transfer of that ownership will be effected only through, records
maintained by the designated Depositary or its nominee (with respect to
interests of participants) and on the records of participants (with respect to
interests of indirect participants). The laws of some states require that
certain purchasers of securities take physical delivery of such securities in
definitive form. Such laws, as well as the limits on participation in the
Depositary's book-entry system, may impair the ability to transfer beneficial
interests in a Global Security.
So long as the Depositary or its nominee is the registered owner of a Global
Security, such Depositary or such nominee will be considered the sole owner or
holder of the Securities represented by such Global Security for all purposes
under the Indenture. Except as provided below, owners of beneficial interests
in Securities represented by Global Securities will not be entitled to have
Securities of the series represented by such Global Security registered in
their names, will not receive or be entitled to receive physical delivery of
such Securities in definitive form, and will not be considered the owners or
holders thereof under the Indenture.
Payments of principal of and any premium and interest on Securities
registered in the name of the Depositary or its nominee will be made to the
Depositary or its nominee, as the case may be, as the registered owner of the
Global Security representing such Securities. First Maryland expects that the
Depositary for a series of Securities or its nominee, upon receipt of any
payment of principal, premium or interest, will credit immediately
participants' accounts with payments in amounts proportionate to their
respective beneficial interests in the principal amount of the Global Security
for such Securities, as shown on the records of such Depositary or its
nominee. First Maryland also expects that payments by participants and
indirect participants to owners of
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beneficial interests in such Global Security held through such persons will be
governed by standing instructions and customary practices, as is now the case
with securities registered in "street name," and will be the responsibility of
such participants and indirect participants. Neither First Maryland, the
Trustee, any Authenticating Agent, any Paying Agent nor the Security Registrar
for such Securities will have any responsibility or liability for any aspect
of the records relating to, or payments made on account of, beneficial
ownership interests in the Global Security for such Securities or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests (Section 3.11).
If the Depositary for Securities of a series notifies First Maryland that it
is unwilling or unable to continue as Depositary or if at any time the
Depositary ceases to be a clearing agency registered under the Exchange Act,
and if First Maryland has not appointed a successor depositary, then First
Maryland will issue Securities of such series in definitive registered form in
exchange for the Global Security representing such series of Securities. In
addition, First Maryland may at any time and in its sole discretion determine
that the Securities of any series issued in the form of one or more Global
Securities shall no longer be represented by such Global Security or
Securities and, in such event, will issue Securities of such series in
definitive registered form in exchange for such Global Security or Securities
representing such series of Securities. Further, if First Maryland so
specifies with respect to the Securities of a series, or if an Event of
Default, or an event which with notice, lapse of time or both would be an
Event of Default with respect to the Securities of such series has occurred
and is continuing, an owner of a beneficial interest in a Global Security
representing Securities of such series may receive Securities of such series
in definitive registered form. In any such instance, an owner of a beneficial
interest in a Global Security will be entitled to physical delivery in
definitive registered form of Securities of the series represented by such
Global Security equal in principal amount to such beneficial interest and to
have such Securities registered in its name (Sections 3.5, 3.11). Securities
so issued in definitive form will be issued in denominations of $1,000 and
integral multiples thereof and will be issued in registered form only, without
coupons.
Restrictive Covenants Applicable to Securities
The Indenture contains a covenant that, with certain exceptions, First
Maryland will not directly or indirectly sell or permit to be issued any
shares of Voting Stock of a Major Constituent Bank (other than directors'
qualifying shares) or any securities convertible into or rights to subscribe
to such Voting Stock, unless, after giving effect to such transaction and to
shares issuable upon conversion or exercise of rights into such Voting Stock,
at least 80% of the outstanding shares of Voting Stock of each class of such
Major Constituent Bank shall be owned at the time, directly or indirectly, by
First Maryland (Section 10.6). The term "Major Constituent Bank" means any
Subsidiary Bank, the total assets of which constitute more than 30% of the
consolidated total assets of First Maryland and its Subsidiaries (Section
1.1). At the date of this Prospectus, the only Subsidiary Bank which was a
Major Constituent Bank was The First National Bank of Maryland.
The Indenture also contains a covenant that First Maryland will not permit a
Major Constituent Bank to merge into or consolidate with, or to lease, sell,
assign or transfer all or substantially all of its properties or assets to,
any Person other than to First Maryland or to a Person the Voting Stock of
which is at least 80% owned by First Maryland (Section 10.7).
Subordination
The obligations of First Maryland to make any payment on account of the
principal of and premium, if any, and interest on the Subordinated Securities
will be subordinate and junior in right of payment to all Senior Indebtedness
of First Maryland (Article Thirteen).
"Senior Indebtedness" is defined in the Indenture to mean (a) all
indebtedness of First Maryland for money borrowed, whether now outstanding or
subsequently created, assumed or incurred, other than any indebtedness which
by its terms is expressly stated not to be superior in right of payment to the
Securities, and (b) any deferrals, renewals or extensions of any such Senior
Indebtedness. The term "indebtedness for money borrowed" means, when used with
respect to First Maryland, any obligation of, or any obligation guaranteed
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by, First Maryland for repayment of borrowed money, whether or not evidenced
by bonds, debentures, notes or other written instruments, and any deferred
obligations for payment of the purchase price of property or assets acquired
other than in the ordinary course of business (Section 1.1). First Maryland's
outstanding 8 3/8% notes due 2002 in the aggregate principal amount of $100
million and its 10 3/8% Subordinated Capital Notes due 1999 in the aggregate
principal amount of $60 million (together, "the Existing notes") will rank on
a parity with any of the Offered Securities. First Maryland's Floating Rate
Junior Subordinated Debentures due 2027 and its Floating Rate Junior
Subordinated Debentures due 2027, Series B, in the aggregate principal amount
of $300 million, will rank junior to any of the Offered Securities.
The Securities will be subordinate in right of payment to all Senior
Indebtedness, as provided in the Indenture. No payment on account of the
principal of and premium, if any, or interest in respect of the Securities may
be made unless all amounts of principal, premium, if any, sinking funds and
interest then due on all Senior Indebtedness shall have been paid in full or
duly provided for and at the time of such payment pursuant to the Securities
or immediately thereafter, there shall not have occurred and be continuing a
default in payment with respect to Senior Indebtedness or an event of default
with respect to any Senior Indebtedness that would permit a holder thereof to
accelerate the maturity of such Senior Indebtedness. Upon any payment or
distribution of assets to creditors upon any insolvency, receivership,
conservatorship, reorganization, readjustment of debt, marshalling of assets
and liabilities or similar proceedings or any liquidation or winding-up of or
relating to First Maryland as a whole, whether voluntary or involuntary, the
holders of all Senior Indebtedness will first be entitled to receive payment
in full before the Holders of the Securities will be entitled to receive any
payment in respect of the principal of and premium, if any, sinking funds and
interest on the Securities. In the event the Holders of Securities receive
payment or distributions of assets of First Maryland and all Senior
Indebtedness has not been paid in full, then such payment or distribution
shall be held in trust for the benefit of the holders of Senior Indebtedness
and shall be paid over or delivered and transferred to the holders of Senior
Indebtedness (Section 13.3). By reason of such subordination, in the event of
insolvency of First Maryland, Holders of the Securities may recover less,
ratably, than holders of Senior Indebtedness.
Events of Default
The Indenture defines an "Event of Default" with respect to Securities of
any series as any one of the following events (whatever the reason and whether
it be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body, and whether or not it be
occasioned by the subordination provisions of the Indenture): (a) failure to
pay any interest on any Security of that series when due and payable,
continued for 30 days; (b) failure to pay principal of or any premium on any
Security of that series when due; (c) failure to perform any other covenants
or warranties of First Maryland in the Indenture (other than a covenant
included in the Indenture solely for the benefit of a series of Securities
thereunder other than that series) continued for 90 days after written notice
as provided in the Indenture; (d) the entry of a decree or order for relief in
respect of First Maryland by a court having jurisdiction in the premises in an
involuntary case, or a decree or order adjudging First Maryland bankrupt or
insolvent, or approving as properly filed a petition seeking the reoganization
of First Maryland, under Federal or state bankruptcy laws and the continuance
of any such decree or order unstayed and in effect for a period of 90
consecutive days; or (e) the commencement by First Maryland of a voluntary
case under Federal or state bankruptcy laws or the consent by First Maryland
to the entry of a decree or order for relief in an involuntary case under any
such law (Section 5.1).
If an Event of Default with respect to Securities of a series occurs and is
continuing, then either the Trustee or the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities of that series may,
or the Trustee if so directed by such Holders shall, declare the principal
amount (or, if the Securities of that series are Original Issue Discount
Securities, such portion of the principal amount as may be specified in the
terms thereof) of all the Securities of that series to be due and payable
immediately. Upon the occurrence of an Event of Default described in clause
(d) or clause (e) of the first paragraph of this section, the principal of the
Securities of such series will become due and payable immediately, without any
action on the part of the Trustee or any Holder (Section 5.2).
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At any time after a declaration of acceleration with respect to Securities
of any series has been made, but before a judgment or decree based on
acceleration has been obtained, the Holders of a majority in aggregate
principal amount of Outstanding Securities of that series may, under certain
circumstances, rescind and annul such acceleration (Section 5.2).
In the event of a default in the payment of principal, premium, if any, or
interest, if any, or the performance of any covenant or agreement in the
Securities or the Indentures, the Trustee, subject to certain limitations and
conditions, may institute judicial proceedings to enforce payment of such
principal, premium, if any, or interest, if any, or to obtain the performance
of such covenant or agreement or any other proper remedy (Section 5.3). Under
certain circumstances, the Trustee may withhold notice to the Holders of the
Securities in a default if the Trustee in good faith determines that the
withholding of such notice is in the best interest of such Holders, and the
Trustee shall withhold such notice for certain defaults for a period of 30
days (Section 6.2).
The Indenture provides that, subject to the duty of the Trustee during
default to act with the required standard of care, the Trustee will be under
no obligation to exercise any of its rights or powers under the Indenture at
the request or direction of any of the Holders, unless such Holders shall have
offered to the Trustee reasonable security or indemnity (Section 6.3). Subject
to such provisions for the indemnification of the Trustee and to certain other
conditions, the Holders of a majority in aggregate principal amount of the
Outstanding Securities of any series will have the right to direct the time,
method and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred on the Trustee, with
respect to the Securities of that series (Section 5.12).
No Holder of any series of Securities will have any right to institute any
proceeding with respect to the Indenture, or for the appointment of a receiver
or trustee or for any remedy thereunder, unless such Holder shall have
previously given to the Trustee written notice of a continuing Event of
Default and unless the Holders of at least 25% in aggregate principal amount
of the Outstanding Securities of that series shall have made written request,
and offered reasonable indemnity, to the Trustee to institute such proceeding
as trustee, and the Trustee shall not have received from the Holders of a
majority in aggregate principal amount of the Outstanding Securities of that
series a direction inconsistent with such request and shall have failed to
institute such proceeding within 60 days (Section 5.7). However, such
limitations do not apply to a suit instituted by a Holder of a Security for
enforcement of payment of the principal of and premium, if any, or interest on
such Security on or after the respective due dates expressed in such Security
(Section 5.8).
The Company is required to furnish to the Trustee annually a statement as to
the performance by First Maryland of certain of its obligations under the
Indenture and as to any default in such performance (Section 10.8).
Modification and Waiver
Modifications and amendments of the Indenture may be made by First Maryland
and the Trustee with the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities of each series issued
under the Indenture and affected by the modification or amendment; provided,
however, that no such modification or amendment may, without the consent of
the Holders of each Outstanding Security of the series affected thereby: (a)
change the Stated Maturity of the principal of, or any installment of
principal of or interest on, any Security of such series, or reduce the
principal amount of or premium, if any, or interest on, any Security of any
series (including in the case of an Original Issue Discount Security the
amount payable upon acceleration of the maturity thereof), or change the place
or currency of payment of principal of or interest on any Security of such
series, or impair the right to institute suit for the enforcement of any
payment on any Security of such series on or after the Stated Maturity thereof
(or, in the case of redemption, on or after the Redemption Date); or (b)
reduce the percentage in principal amount of Outstanding Securities of any
series, the consent of whose Holders is required for modification or amendment
of the Indenture or for waiver of compliance with certain provisions of the
Applicable Indenture or for waiver of certain defaults (Section 9.2).
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The Holders of at least a majority in aggregate principal amount of the
Outstanding Securities of any series may, on behalf of all Holders of that
series of Securities, waive compliance by First Maryland with certain
restrictive provisions of the Applicable Indenture (Section 10.9). The Holders
of a majority in aggregate principal amount of the Outstanding Securities of
any series may, on behalf of all Holders of that series of Securities, waive
any past default under the Indenture, except a default in the payment of
principal, premium, if any, or interest and in respect of certain covenants
(Section 5.13).
Consolidation, Merger and Sale of Assets
Under the Indenture, First Maryland may not consolidate with or merge into
any other Person or sell, convey, exchange, transfer or lease its properties
and assets substantially as an entirety to any Person, unless: (a) any
successor or purchaser is First Maryland or another corporation organized
under the laws of the United States, any state thereof or the District of
Columbia; (b) any such successor or purchaser expressly assumes First
Maryland's obligations on such Securities and under the Indentures; (c)
immediately after giving effect to such transaction, no Event of Default, and
no event which, after notice or lapse of time or both, would become an Event
of Default, shall have occurred and be continuing; and (d) certain other
conditions are met (Section 8.1).
Trustee
Bankers Trust Company is the Trustee under the Indenture. Bankers Trust
Company maintains a deposit account and conducts other banking transactions
with First Maryland and its subsidiaries in the ordinary course of business,
and serves as trustee with respect to the Existing notes, which were also
issued under the Indenture. The Indenture provides for the indemnification of
the Trustee by First Maryland under certain circumstances.
PLAN OF DISTRIBUTION
First Maryland may sell Securities to or through underwriters and also may
sell Securities directly to other purchasers or through agents.
The distribution of Securities may be effected from time to time in one or
more transactions at a fixed price or prices, which may be changed, or at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices.
In connection with the sale of Securities, underwriters may receive
compensation from First Maryland or from purchasers of Securities for whom
they may act as agents, in the form of discounts, concessions or commissions.
Underwriters may sell Securities to or through dealers, and such dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act
as agents. Underwriters, dealers and agents that participate in the
distribution of Securities may be deemed to be underwriters, and any discounts
or commissions received by them and any profit on the resale of Securities by
them may be deemed to be underwriting discounts and commissions, under the
Securities Act. Any such underwriter or agent will be identified, and any such
compensation received from First Maryland will be described, in the applicable
Prospectus Supplement.
Under agreements which may be entered into by First Maryland, underwriters
and agents who participate in the distribution of Securities may be entitled
to indemnification by First Maryland against certain liabilities, including
liabilities under the Securities Act.
If so indicated in the applicable Prospectus Supplement, First Maryland will
authorize underwriters or other persons acting as First Maryland's agents to
solicit offers by certain institutions to purchase Securities from First
Maryland pursuant to delayed delivery contracts providing for payment and
delivery on a future date. Institutions with which such contracts may be made
include commercial and savings banks, insurance companies, pension
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funds, investment companies, educational and charitable institutions and
others, but in all cases such institutions must be approved by First Maryland.
The obligations of any purchaser under any such contract will be subject to
the condition that the purchase of the Offered Securities shall not at the
time of delivery be prohibited under the laws of the jurisdiction to which
such purchaser is subject. The underwriters and such other agents will not
have any responsibility in respect of the validity or performance of such
contracts.
EXPERTS
The consolidated financial statements incorporated herein by reference from
First Maryland's Annual Report on Form 10-K for the years ended December 31,
1996 and 1995, except for the year ended December 31, 1994, have been audited
by Coopers & Lybrand L.L.P., independent auditors, as indicated in their
report, which is incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
The consolidated financial statements of First Maryland for the year ended
December 31, 1994, incorporated herein by reference, have been audited by KPMG
Peat Marwick LLP, independent auditors, as indicated in their report, which is
incorporated herein by reference, and are incorporated herein in reliance upon
the report of such firm given upon their authority as experts in accounting
and auditing.
The consolidated financial statements of Dauphin Deposit Company for the
year ended December 31, 1996 incorporated herein by reference from First
Maryland's Current Report on Form 8-K dated May 21, 1997, incorporated herein
by reference, have been audited by KPMG Peat Marwick LLP, independent
auditors, as indicated in their report, which is incorporated herein by
reference, and are incorporated herein in reliance upon the report of such
firm given upon their authority as experts in accounting and auditing. Such
report contains an explanatory paragraph that states that Dauphin changed its
method of accounting for mortgage servicing rights and long-lived assets to
adopt the provisions of the Financial Accounting Standard Board's Statement of
Financial Accounting Standards No. 122, "Accounting for Mortgage Servicing
Rights, an amendment of FASB Statement No. 65," on January 1, 1995, and No.
121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets
to be Disposed of," on January 1, 1996.
LEGAL MATTERS
The validity of the Offered Securities will be passed upon for First
Maryland by Gregory K. Thoreson, Senior Vice President and General Counsel of
First Maryland, and for any underwriters or agents by Simpson Thacher &
Bartlett (a partnership which includes professional corporations), New York,
New York. As to matters of Maryland law, Simpson Thacher & Bartlett will rely
on the opinion of Mr. Thoreson.
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$100,000,000
First Maryland Bancorp
6.875% Subordinated Notes due 2009
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PROSPECTUS SUPPLEMENT
May 25, 1999
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Salomon Smith Barney
Bear, Stearns & Co. Inc.
J.P. Morgan & Co.
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