Local thrift to be paid $3.35 million over loss


March 09, 2007|By Paul Adams | Paul Adams,SUN REPORTER

Baltimore County Savings Bank said yesterday that its insurer has agreed to pay $3.35 million as compensation for the bank's losses in an alleged check-kiting scheme last year.

The Baltimore bank, which is operating under the supervision of federal regulators while it rebuilds its finances, said it is still hoping to recover more of the $10.7 million it lost in the alleged scheme.

But any further recovery could take an "extended period of time" to resolve, the bank said in a statement. The losses stemmed from one of the bank's commercial customers, which court filings identify as the now-bankrupt A&B Check Cashing.

After taxes, the payment, which was announced after the close of markets, will add $2.2 million to the bank's profit for the quarter that ends March 31.

The company's shares were unchanged yesterday at $15.41.

Joseph J. Bouffard, who took over as the bank's chief executive after the check-kiting scandal, could not be reached for comment yesterday.

The news comes less than a month after the bank announced plans to reorganize as a fully public company in an effort to raise capital. The move is aimed at giving the bank more breathing room during potential downturns.

The Office of Thrift Supervision has been scrutinizing the bank's internal controls and capital structure since December 2005.

The bank became a publicly traded mutual holding company in 1998, selling 35 percent of its shares to outside investors and leaving the rest in the hands of depositors.

The proposed reorganization involves selling the remaining 65 percent of the company to public shareholders, with depositors getting shares of equal value in the new corporate structure. The public offering is expected to close this summer.


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