Baltimore Bancorp reports profit, hits key capital levels

July 15, 1993|By Ross Hetrick | Ross Hetrick,Staff Writer

Nearly two years after taking losses that seriously depleted its financial strength, Baltimore Bancorp reported $2.6 million in second-quarter earnings yesterday and said it had climbed back to a solid footing by surpassing two key capital levels.

Reaching the goal was a critical milestone for the state's fifth-largest banking operation, according to David L. Spilman, treasurer of Baltimore Bancorp. "Especially since less than two years ago the bank was on the brink of extinction," he said.

Baltimore Bancorp, the parent of the Bank of Baltimore, announced that as of June 30, it had reached a 8.93 percent

"Tier 1 risk-based" capital ratio and a 10.20 percent "Total risk-based" capital ratio. This puts the bank holding company in the federal bank regulators' category of "well-capitalized," since the ratios are above the capital standards of 6 percent for Tier 1 risk-based and 10 percent for Total risk-based.

Capital ratios, which measure various aspects of a bank's net worth against its total assets, are a key indicator of a bank's financial strength.

Baltimore Bancorp's capital levels slid to a dangerously low level at the end of 1991 after a huge write-down of assets that resulted in a $126 million loss during that year.

That write down came after Edwin F. Hale Sr., who is now chairman and chief executive officer, and a group of dissident stockholders won a proxy fight against the company's management in September 1991. That fight was sparked by shareholder outrage over the management's rejection a year earlier of an offer to be acquired by First National Bank of Maryland, the state's second-largest banking operation.

After taking control of the bank, the new management reviewed the quality of the bank's assets and took the large write-offs after deciding that many assets -- including some loans -- had questionable value.

This also pushed the bank into an agreement with the Federal Deposit Insurance Corp. and the Maryland Bank Commission that required the bank to meet various financial goals by June 30, 1994. All these targets have been reached except one, which compares the size of the bank's portfolio of bad loans to its capital and loan reserves, Mr. Spilman said. That goal should be reached by Sept. 30, ahead of schedule, he said.

The bank was able to pull itself up by shrinking its assets, posting more than $21 million in profits during the past six quarters and raising $29 million in a special stock offering to shareholders, Mr. Spilman said.

The income over the past three months, equalling 18 cents a share, compared with income of $5.8 million, or 45 cents a share, a year ago.

In a statement, Mr. Hale said the bank will now seek the lifting of the agreement with regulators since most of the requirements have been reached.

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Baltimore Bancorp

Ticker ... ... ... ... Yesterday's

Symbol ... ... ... ... Cls. ... ... Chg.

BBB ... ... ... .. ... 9 1/2 ... Unch.

Period ended

June 30 ... ... ... 2nd qtr. ... ... Year ago ... ... Chg.

Net Income .. .. .. $2,648 ... .. .. $5,795 ... .. .. -54.3%

Primary EPS ... ... $0.18 ... ... .. $0.45 ... ... .. -60.0%

Annualized return

on assets ... ... .. 0.45 ... ... .. 0.78

Add. to allowance

for loan losses ... $6,000 ... .. .. $13,000 ... .. .. -53.8%

... ... ... ... ... 6 mos. ... ... ... Year ago ... ... ... Chg.

Net Income .. .. .. $7,528 ... ... ... $10,897 ... .. .. .. -30.9%

Primary EPS ... ... $0.52 ... .. .. .. $0.85 ... ... ... .. -38.8%

Annualized

return on assets .. 0.64 ... ... .. .. 0.71

Add. to allowance

for loan losses ... $12,000 ... ... .. 17,881 .. ... ... .. -32.9%

... ... ... ... ... Balances as of

... ... ... ... 6/30/93 ... ... ... ... ... ... ... 6/30/92

Assets .. ... .. .. $2,304,640 .. ... ... ... ... .. .. $2,869,320 ... -19.7%

Deposits ... ... .. $2,086,435 .. ... ... ... ... .. .. $2,632,374 ... -20.8%

Loans outst. ... .. $1,426,666 .. ... ... ... ... .. .. $1,656,633 ... -13.9%

Loan loss

reserve ... ... ... $58,298 ... ... ... ... ... ... ... $88,520 ... .. -34.1%

Figures in thousands (except per share data.)

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