T. Rowe Price Associates Inc. said it expects a decline in first-quarter earnings, but that the picture should brighten later in the year.
Several factors are contributing to the decline, George A. Roche, chief financial officer of the Baltimore-based mutual fund company, told shareholders at yesterday's annual meeting.
The company is still putting money into starting its new Owings Mills office building, but the site won't begin generating revenue until later in the year. Also, the company is still feeling the effects from the bankruptcy filing of Mortgage and Realty Trust of Elkins Park, Pa., from which T. Rowe Price had bought commercial paper.
T. Rowe Price took a $4 million after-tax charge on its 1990 second-quarter earnings as a result of its purchase of $64.6 million worth of commercial paper issued by Mortgage and Realty Trust. After the trust filed for bankruptcy, T. Rowe revalued its commercial paper to $58.1 million.
T. Rowe Price bought the commercial paper from a variety of its funds after Mortgage and Realty Trust filed for bankruptcy in order to protect the investors in the funds.
Mortgage and Realty Trust paid no interest on its commercial paper while it was under Chapter 11 protection. But the company emerged from bankruptcy in February and made a $7.4 million payment to T. Rowe Price. The company has again started to pay interest on its commercial paper held by T. Rowe Price and, under the terms of its reorganization plan, is to pay off its debt by December 1995.
Roche cited the allied victory in the Persian Gulf and the boost in consumer confidence as contributing toward an improved financial picture for the rest of the year. As the financial markets regain strength, T. Rowe's income should increase, he said.