Blaming ousted management, Baltimore Bancorp, the parent company of the Bank of Baltimore, announced a $40 million loss during its third quarter, wiping out the bank holding's company's profits in the first two quarters.
The company also announced that it is suspending common stock dividend for the first time since it public in late 1984.
Bank analysts had expected a large loss as a result of the new management's close scrutiny of its financial books. By taking a large provision for possible loan losses now, the company also protects itself from future problems.
Management had earlier announced that it had changed its outside auditing firm to Coopers & Lybrand from Ernst & Young.
The loss per share was $3.14 cents. In the 1990 third quarter, the company had a net income of $5 million, or 39 cents per share.
For the first nine months, the company had a loss of $31.9 million, or $2.52 a share, compared to net income of $15.5 million, or 95 cents per share, in the year-ago period.
The bank said it took a $47 million provision for possible loan losses in the third quarter for problems that should have been recognized by prior management.
Edwin F. Hale Sr., the owner of trucking and shipping companies and the Baltimore Blast, became chairman of the board on Sept. 11 after a bitter proxy fight in which Hale's group was severely critical of the bank's financial condition.
"The new board is moving as quickly as possible to recognize the extent of the bank's problem loans, to maintain appropriate loan loss reserves and to take more aggressive actions to work out of troubled projects," Hale said.