First Maryland profit declines but revenue is up

Charge-offs, setbacks in maritime business cut into 1st-quarter net


April 22, 1999|By FROM STAFF REPORTS

First Maryland Bancorp reported first-quarter net income of $42.4 million yesterday, and said that despite setbacks in its maritime loan business, it saw a 6 percent rise in revenue growth, led by trust and investment advisory fees, retail service fees and commercial mortgage banking income.

In the same quarter a year ago, the company, a subsidiary of Allied Irish Banks PLC, had $95.7 million in net earnings.

The earnings were affected, in part, by two large, unusual one-time gains, the $60 million sale of its credit-card business to Bank of America N.A., and sale of $30 million in stock and other security holdings.

The Baltimore financial institution is changing its name to Allfirst Financial Inc. in late June.

First Maryland said earnings for the first quarter, which ended March 31, were "negatively impacted" by charge-offs and the costs of seizing and selling ships that were held as collateral against foreign shipping loans.

That foreign maritime industry has been hard hit by the economic downturn in Asia, said Gerry Evans, FMB's vice chairman and chief financial officer.

FMB also took $7 million in charge-offs for unpaid loans in the shipping industry, and booked $3.2 million in collection costs for its maritime loan portfolio.

"We expect to see some further deterioration in that business, but it won't be as bad as it was last year," Evans said. He said the institution expects the shipping industry to begin to rebound in the second quarter.

The company also reported that first-quarter credit losses rose to $11.6 million, compared with $8.9 million in the first quarter of 1998.

First Maryland reported growth in its commercial loan business, which increased by almost 15 percent, and its commercial real estate loans and retail loan business. They were up by 5 percent and 7 percent, respectively, when compared with the same quarter a year ago.

First Maryland said operating expenses declined by $18.8 million when compared with first quarter 1998.

Those cost savings largely have come from FMB's merger with Dauphin Deposit Bank & Trust Co., and the sale of its credit-card, mortgage banking and stock brokerage businesses, FMB said.

"Overall, we feel like shouting from the rooftops that we had a very strong quarter," Evans said. "We are right on target for where we thought we'd be at this time."

Pub Date: 4/22/99

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