Troubled investments in foreign shipping companies cost First Maryland Bancorp $29.2 million last year, leading the company to withhold bonuses for top executives for the first time in four years.
The top five executives at First Maryland Bancorp, the holding company for First National Bank of Maryland, received annual bonuses as high as $450,000 in 1997. But, according to a proxy statement, the company failed to meet its established performance goals last year and no bonuses were awarded.
The Baltimore-based bank reported record income for 1998 -- $218.1 million for the year, compared with $151.2 million in 1997, an increase of 44.3 percent.
But the bank's $264.2 million portfolio of investments in foreign shipping suffered from bad markets for dry bulk and liquid cargo, particularly in Asia, the company reported.
First Maryland spent $9.8 million in collection costs on maritime loans, and was forced to charge off $19.4 million in bad debts.
"We set the bar high and we set challenging goals," said First Maryland Senior Vice President Elizabeth McLean.
"And, despite the fact that 1998 was a tremendous success for us, we did not meet all the financial targets that were required for the awarding of bonuses."
First Maryland's foreign shipping portfolio makes up about 3 percent of the company's as- sets. It consists mostly of loans to foreign ship owners who operate or charter bulk-cargo vessels and tankers in various trades around the world.
Chief Executive Officer Frank P. Bramble said earlier this year that the company is committed to investments in the foreign shipping trade.
"The foreign maritime portfolio is being actively managed, and we are satisfied that our overall asset quality remains strong," Bramble said in January.
But company officials are pessimistic about the prospects of a quick recovery of the maritime portfolio.
"It does not appear that these markets will improve significantly in 1999, and the corporation may experience further deterioration in its foreign maritime portfolio," the company wrote in an annual report filed recently with the Securities and Exchange Commission.
In 1997, Bramble and Chairman Jeremiah E. Casey each received a $450,000 bonus in addition to $600,000 in salary. Three executive vice presidents received bonuses ranging from $174,000 to $225,000, with annual salaries of $290,000 to $375,000. Those salaries were unchanged for 1998, but no bonuses were awarded.
Officials will not say what performance standards must be met for executives to receive annual bonuses.
First Maryland Bancorp, with headquarters in Baltimore, operates about 300 branch offices in the mid-Atlantic states, under the names First National Bank of Maryland, Dauphin Deposit Bank and the York Bank.
It is a subsidiary of Dublin-based Allied Irish Banks PLC, with assets of $18.3 billion at the end of 1998.
Pub Date: 4/03/99