Baltimore Bancorp agrees to regulatory curbs Capital ratios must rise, bad assets must be cut

July 16, 1992|By David Conn | David Conn,Staff Writer

Baltimore Bancorp signed a "cease and desist" order yesterday with federal and state regulators that requires the lTC parent of the Bank of Baltimore to raise its capital ratios and lower the amount of troubled assets on its books.

The agreement also sharply restricts the types of activities the company may undertake without regulatory approval.

Executives at Baltimore Bancorp also followed up on their promise to repeat their profitable first-quarter performance by reporting a $5.8 million second-quarter profit. And they announced that the company has retained New York investment banker Kidder, Peabody & Co. to "assist in the evaluation of strategic alternatives and their prospective benefits to stockholders," a euphemism that often includes seeking a buyer for the company.

Kidder, Peabody will also lead the search for additional capital.

The regulatory order prohibits the Bank of Baltimore from paying dividends to its parent company without approval from the Federal Deposit Insurance Corp. and the Maryland bank commissioner, and forbids the company from accepting or renewing brokered deposits. The company also must prepare and submit to the regulators plans and reports about its capital adequacy, liquidity, loan administration, earnings and management.

Company officials played down the importance of the regulatory order, which requires the banking company to raise a key capital ratio to 4.5 percent by Dec. 31 this year from a current 4.08 percent. The company said it expects to make a public stock offering within the next year to reach a required capital ratio of 6 percent by June 30, 1993.

"We have already taken steps to address many of the requirements of the agreement and the order," Chairman Edwin F. Hale Sr. said in a statement, which also reflected the uncertain future of Maryland's fifth-largest banking company, which has 49 branches and almost $2.9 billion in assets.

"We fully recognize that we have our work cut out for us to achieve these goals," Mr. Hale said, "and that there is little margin for error in our projections." Mr. Hale and his top executives took over management of the company in September after a proxy fight that ousted the former management and most of the former board of directors.

Baltimore Bancorp

Three months ended 6/30/92

Income Share

'92... ...5,795,000... ... ... ...0.45

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

% change.. +92.9... .. ... ... ... +87.5

Six months ended 6/30/92

Income Share

'92... ... ..10,897,000... ... ... ...0.85

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

% change .. .+34.8... ... ... ... .. ..+34.9

Balances as of 6/30/92

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

'92... ...2,869,320,000... ... ..2,632,374,000

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

% change ..16.8... ... ... ... ... 7.3

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