Baltimore Bancorp posts drop in quarterly profits

July 18, 1991|By Timothy J. Mullaney

Baltimore Bancorp said yesterday that its second-quarter earnings were lower than in 1990 and pinned most of the blame on more than $3 million in unusual costs for fighting a proxy battle with dissident shareholder Edwin F. Hale Sr. and buying out the contract of former Chairman Harry L. Robinson.

The company said that it earned $3 million, or 24 cents a share, during the three months that ended June 30. The parent company of the Bank of Baltimore earned $5.4 million, or 42 cents a share, during the same part of last year.

Management said its proxy contest had cost $1.3 million through June 30 and that the Robinson buyout cost $1.8 million, slightly more than the $1.7 million figure management had previously confirmed.

Last year's results also included a one-time gain of 12 cents a share, making this year's figures look worse by comparison.

David Penn, a Legg Mason banking analyst, said that when the extras are taken out, this year's second-quarter profit was slightly below last year's.

"Just listening to it, it sounds OK," Mr. Penn said. "Non-performing assets [mostly loans that are past due] were stable. Charge-offs [loans on which the bank has given up hope of repayment] were up a little, but they're still under 1 percent of total loans, and that's not bad."

But Mr. Penn also noted that the operating results work out to an annual return of about 0.4 percent of the bank's assets. A high-quality bank will often earn a 1 percent return -- a point the Hale camp stressed during a proxy contest in

May that resulted in the election of six directors backed by Mr. Hale to the board.

While saying second-quarter earnings were "pretty goodconsidering the weak real estate market and the "distractions" of the proxy contest, Baltimore Bancorp Chairman Robert F. Comstock said, "For the long term, we know our profit performance should be better, so we've put a new operating plan into placethat we think will make us a more profitable institution."

He also said that the board had decided to redeem its "poison pill" shareholder rights, following a vote on the action during the recent proxy fight. The move effectively eliminates the takeover defense.

Jerome P. Baroch, executive vice president of Baltimore

Bancorp, said the new plan is designed to slow the bank's growth while increasing its profits. He said the company hopes to cut its dependence on deposits that pay high interest rates, especially brokered certificates of deposit placed with the company by out-of-town depositors. The company also wants to get into lines of loan business that pay higher interest rates, he said.

Three months ended 6/30/91

... ... ... ... Income... ... ... ... ... ...Share

'91... ... ... 3,004,000... ... .... ... ...0.24

... ... 5,403,000... ... .... ... ...0.42

change... ... .. --44.4 ... ... ... ... ..--42.9

... ... ... ... Assets... ... ... ... ... Deposits

'91... ... .. 3,448,599,000... ... 2,840,433,000

'90... ... .. 3,484,179,000... ... 2,749,273,000

% change... ... ... ...-1.0... ... ... ... .. +3.3

Six months ended 6/30/91

... ... ... ... ...Income... ... ... ... ... Share

'91... ... ... 8,083,000... ... ... ... ... 0.63

'90... ... ... 10,519,000... ... ... ... ...0.82

change... ... ... .-23.2... ... ... ... ...-23.2

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