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BALTIMORE BANCORP REPORTS FULL YEAR RESULTS

 BALTIMORE BANCORP REPORTS FULL YEAR RESULTS
 BALTIMORE, Jan. 27 /PRNewswire/ -- Baltimore Bancorp (NYSE: BBB),


parent company of The Bank of Baltimore, today announced a net loss of $69.6 million, or $5.46 per share for the fourth quarter of 1991.
 The results included a $35.8 million after-tax amortization and write-off of all remaining goodwill related to previous acquisitions and a $49.8 million provision for possible loan losses. For the fourth quarter of 1990, the net loss was $6.5 million, or $.51 per share. For the full year, the net loss for 1991 was $101.5 million, or $7.96 per share compared with net income of $9.0 million, or $.71 per share for 1990. At $132.2 million on Dec. 31, 1991, stockholders' equity amounted to 4.12 percent of assets and $10.39 per share.
 C.H. Whittum Jr., chief executive officer, said, "Upon taking office last September, the new board of directors assigned top priority to thorough reviews of the company's loan portfolios and its financial condition. Those reviews are complete. We have reclassified a substantial amount of loans to nonperforming assets, mostly in the third quarter, and have established appropriate reserves. We also concluded, in the fourth quarter, that premiums paid in 1985 and 1987 for two savings banks appeared to be excessive and that the resulting goodwill had little or no value." Whittum added, "Most importantly, we believe that we have now identified the problems and have taken the initial steps necessary to improve capital ratios and pave the way for renewed profitability in the years ahead."
 The goodwill related principally to the acquisition, in 1987, of Metropolitan Federal Savings and Loan Association of Bethesda, Maryland. Baltimore Bancorp's prior chairman, Robert F. Comstock, was chairman and chief executive officer of Metropolitan, and Harry L. Robinson was chairman and chief executive officer of Baltimore Bancorp at the time Metropolitan was acquired. The write-off of goodwill, which has no tax benefit, does not impact the bank's capital ratios for regulatory purposes because goodwill is omitted by definition. At Dec. 31, 1991, Leverage, Tier 1, and Total capital ratios for The Bank of Baltimore were 4.10 percent, 5.05 percent and 6.31 percent, respectively. Furthermore, the write-off mitigates goodwill amortization expense over the next 15 years and has the effect of increasing future net income by approximately $2.2 million a year.
 The fourth quarter 1991 provision for possible loan losses raised the allowance (reserve) to $110.0 million, or 5.45 percent of total loans and 57 percent of nonperforming loans at year-end. Excluding $92.5 million of restructured loans, which pay varying amounts of interest at below-market rates, the allowance for possible loan losses amounted to 109 percent of nonaccruing loans at Dec. 31, 1991 compared with 88 percent at the end of 1990. Total nonperforming assets were $250.2 million at Dec. 31, 1991 compared with $222.1 million at Sept. 30, 1991 and $71.0 million at year-end 1990. Net loan losses for the fourth quarter of 1991 amounted to $11.8 million compared with $9.5 million for the third quarter. For the full year, net loan losses were 1.31 percent of average loans in 1991 compared with 0.29 percent in 1990. The final quarter of 1991 also included $2.8 million of net securities losses related chiefly to market value adjustments on interest rate swaps entered into in 1985 and 1986. The quarter also included $1.6 million of other operating expense attributed to corporate restructuring costs.
 Other fourth quarter 1991 activity included a private sale of $102 million in residential mortgages in the secondary market. The transaction marked the beginning of a program to improve the company's capital ratios. At Dec. 31, 1991, assets held for future sales amounted to $376.1 million and included $120 million in credit card receivables to be securitized in the first quarter of 1992, $102 million in U.S. Treasury bonds earmarked for sale to coincide with maturing high-cost deposits throughout the year, $100 million of additional residential mortgages warehoused for sale over the next several months and $54 million of other securities slated for sale by mid-year 1992.
 Excluding nonrecurring items and certain other amounts, operating noninterest income for 1991 increased by 49 percent compared with 1990. On the same basis of comparison, operating noninterest expense increased by 8 percent. Operating noninterest income excludes investment securities gains and losses, interest on a tax settlement and nonrecurring fees and profits. The resulting increase is largely attributed to higher mortgage banking fees and trading account income. Operating noninterest expense excludes the goodwill write-off, restructuring costs, proxy contest expense, FDIC insurance, and other real estate owned expense.
 On Sept. 11, 1991, a group led by Edwin F. Hale, Sr., chairman of the board, assumed management responsibility for Baltimore Bancorp following a stockholders meeting in August 1991. On Oct. 4, the company announced the appointment of new outside auditors and, on Oct. 25, it reported a net loss of $40.0 million for the third quarter attributed mostly to nonperforming assets. The company also announced, on Oct. 25, the suspension of dividend payments. At that time, Hale expressed the company's intention to quickly recognize the extent of problem loans and to take more aggressive actions to increase reserves and work out of troubled projects.
 During the fourth quarter, management continued the extensive reviews of loans and loan portfolios which began in September. A candid, realistic assessment of the bank's position with respect to particular loans resulted in a substantial additional provision for loan losses and the identification of additional nonperforming assets. "We believe this process and the application of prudent, conservative judgement was much more extensive and thorough than that used by previous management," said Whittum. "Most importantly, we believe we are now in a position to effectively manage our troubled assets and have recognized the financial effects of the real estate environment which has plagued the banking industry in the Baltimore/Washington region for the last several years."
 Hale added, "We have now also completed our plan to streamline executive management and have established a new team of seasoned banking professionals. Our top five executives have combined commercial banking experience exceeding 130 years and are well prepared to meet the challenges they face."
 Baltimore Bancorp is a $3.2 billion Baltimore-based bank holding company. Its principal subsidiary, The Bank of Baltimore, founded in 1818, operates 51 branches within the Baltimore/Washington common market.
 BALTIMORE BANCORP AND SUBSIDIARIES
 Financial Highlights
 (Thousands, except per-share data)
 Periods ended Quarter Pct. Year Pct.
 Dec. 31 1991 1990 Chg. 991 1990 Chg.
 Results of operations
 Net interest income $19,158 $19,892 (4) $76,991 $83,696 (8)
 Provision for possible
 loan losses 49,816 18,920 163 104,068 25,120 314
 Other operating income 5,818 5,214 12 23,825 17,167 39
 Investment securities
 gains (losses) (2,790) 1,381 NM (3,949) 1,747 NM
 Amortization and
 write-off of
 goodwill 35,798 794 NM 38,150 3,336 NM
 Other operating
 expense 24,578 20,041 23 91,878 69,449 32
 Income taxes
 (benefit) (18,417) (5,060) NM (35,527) 826 NM
 Income (loss) before
 extraordinary item (69,589) (8,208) NM (101,702) 3,879 NM
 Extraordinary item(A) 1,678 NM 213 5,131 NM
 Net income (loss) (69,589) (6,530) NM (101,489) 9,010 NM
 Per share:
 Income (loss) before
 extraordinary item (5.46) (.64) NM (7.98) .31 NM
 Extraordinary item(A) .13 NM .02 .40 NM
 Net income (loss) (5.46) (.51) NM (7.96) .71 NM
 Cash dividends declared .15 NM .39 .60 (35)
 Redemption of stockholder
 rights .01
 Book value 10.39 18.45 (44)
 Common stock closing price (NYSE) 5.25 4.2524 24
 At Dec. 31
 Investment securities $597,756 $646,598 (8)
 Loans (net of unearned income) 2,019,590 2,226,043 (9)
 Earning assets 3,072,621 3,342,001 (8)
 Total assets 3,211,293 3,523,429 (9)
 Core deposits(B) 2,249,689 2,145,865 5
 Total deposits 2,947,978 2,911,255 1
 Stockholders' equity 132,195 235,288 (44)
 Shares outstanding 12,725 12,750
 Average balances:
 Investment
 securities 694,238 888,611 (22) 737,106 908,733 (19)
 Loans (net of
 unearned income) 2,256,859 2,240,618 1 2,262,975 2,258,486
 Earning assets 3,155,275 3,321,509 (5) 3,192,383 3,276,217 (3)
 Total assets 3,291,573 3,500,281 (6) 3,359,263 3,463,207 (3)
 Core deposits(B) 2,220,250 2,129,623 4 2,182,892 2,070,766 5
 Total deposits 2,901,955 2,864,341 1 2,875,458 2,763,377 4
 Stockholders'
 equity 181,728 242,158 (25) 221,265 241,810 (9)
 Nonperforming assets
 (period end):
 Nonperforming loans $193,810 44,632 334
 Other assets owned 56,377 26,407 113
 Total nonperforming assets 250,187 71,039 252
 Ratios (pct):
 Nonperforming assets to total assets 7.79 2.01
 Nonperforming assets to loans plus
 assets acquired in foreclosure 12.05 3.15
 Allowance to nonperforming loans 56.78 79.54
 Allowance to total loans 5.45 1.59
 Net loan losses to average loans 1.31 .29
 Earnings ratios (pct):
 Return on
 average total assets (8.37) (.75) (3.01) .26
 Return on average
 stockholders' equity (153.17) (10.79) (45.87) 3.73
 Net yield on average
 earning assets 2.45 2.43 2.44 2.59
 Capital ratios (pct.) (period end):
 Stockholders' equity to total assets 4.12 6.68
 Tier 1 risk-based capital (fully phased in) 4.81 7.20
 Total risk-based capital (fully phased in) 6.33 8.41
 (A) Gain, net of taxes, from early extinguishment of debt.
 (B) Total deposits excluding certificates of deposit $100,000 or more.
 NM -- Not meaningful
 -0- 1/27/92
 /CONTACT: David L. Spilman of Baltimore Bancorp, 800-722-8823/
 (BBB) CO: Baltimore Bancorp ST: Maryland IN: FIN SU: ERN


KA -- PH031 -- 3912 01/27/92 16:33 EST
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Date:Jan 27, 1992
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