Glen Burnie Bancorp posts $1.7 million loss $4.5 million in loans to failed trucking firm hurt company in 1995

March 15, 1996|By Bill Atkinson | Bill Atkinson,SUN STAFF

Stung by the bankruptcy of a Baltimore-based trucking company, Glen Burnie Bancorp lost $1.7 million in 1995 after writing off millions of dollars in loans, bank officials said yesterday at the company's annual meeting.

The $246 million-asset banking company also agreed last week to enter into a memorandum of understanding with its regulator, the Federal Deposit Insurance Corp. The agreement requires the company and its subsidiary, Bank of Glen Burnie, to improve loan administration, loan collection and adopt a strategic plan.

John E. Porter, Glen Burnie Bancorp's treasurer, said the bank made 28 loans to Oceanic Ltd. Inc. and related parties worth $4.5 million, which have been written off.

"It was a zinger," Mr. Porter said in an interview following the annual meeting. "It just slowly built to a tidal wave."

Despite the loss, the bank has $21 million in capital, which is quite high according to regulatory standards.

Oceanic is being liquidated by a trustee who was appointed by a bankruptcy court judge in December. Several other area banks have sued the trucking company, claiming they were defrauded of millions of dollars by the company's president, Brian H. Davis.

They allege that Oceanic and Mr. Davis illegally financed tractors three and four times each through a "fraudulent titling and re-titling scheme" that allowed the trucking company to secure millions in loans.

The 125 stockholders who attended the meeting at the LaFontaine Bleu Catering in Glen Burnie, took the bad news in stride, and asked few questions about the losses.

"I think we were very forthcoming with the facts," said John E. Demyan, the company' chairman. "I believe the confidence in the bank is quite high."

One shareholder, however, asked F. William Kuethe Jr., Glen Burnie Bancorp's president and chief executive, why the company paid a dividend for the year when the bank lost money.

The losses "occurred in one year and in one year only," Mr. Kuethe said. "They will not happen again."

During the meeting, Mr. Kuethe told stockholders that the Federal Bureau of Investigation and the U.S. attorney's office are conducting investigations into the Oceanic matter, but the bank is not a target. Mr. Kuethe said an employee of the bank is cooperating with federal authorities, but the employee is not a target in the investigation.

Legal and banking sources said a grand jury in Baltimore is hearing testimony on the Oceanic case.

Mr. Kuethe said the bank had already taken steps to meet the FDIC's memorandum of understanding by hiring an outside consultant to review its operations.

After the meeting, Mr. Porter said the senior loan officer who made the loans to Oceanic had resigned.

Mr. Porter expects the company to rebound this year, earning as much as $3.3 million.

During 1995, Glen Burnie Bancorp set aside $7.9 million for problem loans, up from $1.1 million the prior year. The $1.7 million loss followed a profit in 1994 of $3.5 million.

Pub Date: 3/15/96

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