Baltimore Bancorp to pay first dividend in 2 years Payout to come from stock sales

November 18, 1993|By Timothy J. Mullaney | Timothy J. Mullaney,Staff Writer

Baltimore Bancorp said yesterday it would do what it has not done in two years pay a quarterly dividend.

The dividend, the first since 1991, will come from money left over from $20.9 million of stock sales that had been made primarily to help the company's Bank of Baltimore unit rebuild its recession-battered capital base.

The company presented the move as another sign of its recovery from real-estate related loan losses that so depleted the bank's capital that the company last year signed an agreement to let federal regulators supervise operation of the company.

"We've requested and received approval from the Federal Reserve Board, which was necessary under the agreement," said David L. Spilman, the company's treasurer and investor relations director. But he stopped short of saying the Fed's approval of the dividend means that the supervisory agreement, which requires the company to clear major moves with regulators, will soon be lifted.

"The best way we can say that is that the lifting of the [agreement] is a lagging indicator of improvement," he said. "We wanted this dividend action to be a leading indicator."

The 5-cent dividend is payable Dec. 29 to shareholders of record as of Dec. 15.

Analysts were enthusiastic about the move, which one said reflected the unusual decisiveness of the bank's program to raise equity and sell or restructure shaky loans.

"I had no doubt they could make this progress, but I had expected it to be over a much longer time period," said Alex Hart of Ferris, Baker Watts Inc. in Baltimore.

John Heffern, of Alex. Brown Inc. in Baltimore, said the company has come from being classified as "undercapitalized" by regulators 13 months ago to being "well-capitalized" on Sept. 30. "They've issued stock, and they've made some money," Mr. Heffern said. "I think this confirms the fact that significant progress has been made."

Mr. Heffern said bank officials told him they expect the extra regulatory supervision to be lifted early next year, after regulators examine the company's books.

The company used to pay 15 cents a share on its stock quarterly, but the former directors cut the payout 40 percent in the midst of a 1991 proxy contest with a slate of directors led by current chairman Edwin F. Hale. Mr. Hale's team eliminated the payout entirely six weeks after taking control.

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