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BALTIMORE BANCORP REPORTS INCREASED EARNINGS; SIGNS AGREEMENT AND ORDER WITH REGULATORS

 BALTIMORE BANCORP REPORTS INCREASED EARNINGS;
 SIGNS AGREEMENT AND ORDER WITH REGULATORS
 BALTIMORE, July 15 /PRNewswire/ -- Baltimore Bancorp (NYSE: BBB), the parent company of The Bank of Baltimore, today reported net income of $5.795 million, or $.45 per share, for the quarter ended June 30, 1992, an increase of 93 percent compared with $3.004 million for the second quarter of 1991, or $.24 per share.
 For the six months ended June 30, 1992, net income amounted to $10.897 million, or $.85 per share, a 35 percent increase from $8.083 million, or $.63 per share, reported for the first half of 1991. The six-month return on average assets was .71 percent for 1992 versus .48 percent for 1991. The interest margin for the recent quarter was 3.13 percent compared with 2.67 percent for the second quarter of 1991.
 Core earnings, calculated as income before the provision for possible loan losses, other real estate owned expense, nonrecurring items and income taxes, amounted to $10.0 million for the quarter ended June 30, 1992, compared with $7.5 million for the quarter ended March 31, 1992, and $6.9 million for the second quarter of 1991.
 C.H. Whittum Jr., chief executive officer, said, "We continued to show significant improvement in both core earnings and net income during the second quarter. This is the kind of progress we planned and is consistent with our near-term goals for increasing capital."
 Alan M. Leberknight, president and chief operating officer, added, "The financial heartbeat of this company and its earnings progress is centered in a well-defined and loyal customer base. They have made this performance possible, and we are dedicated to giving them continually enhanced service."
 Net income for the second quarter of 1992 included a $1.7 million gain from the sale of $55 million of home equity loans in early April. This brought home equity loan sales to $173 million for the six-month period. The recent quarter also included $1.9 million of income from the sale of mortgage servicing rights. Additionally, the second quarter included $7.0 million of interest income from an income tax settlement following a favorable U.S. Supreme Court ruling. This issue relates to a previously disallowed loss deduction on a mortgage loan swap in 1981. Additionally, the provision for possible loan losses was increased to $13.0 million for the second quarter of 1992 compared with $4.9 million for the first quarter.
 Nonperforming assets declined to $226.1 million at June 30, 1992, from $237.9 million at March 31, 1992. The reduction was related chiefly to the disposition of real estate previously acquired in foreclosure. Net loans charged off amounted to $5.1 million for the second quarter of 1992, compared with $1.6 million for the first 1992 quarter. The allowance for possible loan losses was increased to $88.5 million at June 30, 1992 from $80.7 million at March 31, 1992, increasing the coverage ratio of nonperforming loans to 52 percent at June 30 from 48 percent at March 31.
 Baltimore Bancorp also announced today that it has entered into a written agreement with the Federal Reserve Bank of Richmond ("FRB") and the Maryland Bank Commissioner ("Commissioner"), and that The Bank of Baltimore has consented to a Cease and Desist Order issued by the Federal Deposit Insurance Corporation ("FDIC") and the Commissioner. The agreement and order relate to problems which were created prior to September 11, 1991, the date that a majority of the current board of directors took office following a proxy contest. The principal components of both the agreement and order are consistent with the company's financial and strategic plans as approved by the current board earlier this year.
 The agreement with the FRB and the Commissioner prohibits the payment of cash dividends and certain transactions between the parent company or its affiliates with the Bank without prior regulatory approval. (The current board announced the suspension of dividends in October 1991.) The agreement also requires the parent company to provide the FRB and the Commissioner with plans and reports pertaining to capital adequacy, liquidity and the repayment of an unsecured loan from the Bank, and to develop written policies regarding intercorporate fees and payments. The agreement also limits certain parent company borrowings and payments without prior regulatory approval.
 The order from the FDIC and the Commissioner requires that the bank obtain prior regulatory approval to pay dividends to the parent, prohibits the acceptance or renewal of brokered deposits, sets Leverage capital ratios and the dates by which the ratios must be achieved, and specifies reductions in the level of classified assets. The order also calls for the submission of various reports and the development and implementation of plans relating to management, asset quality, loan administration, earnings and liquidity.
 The order requires the bank to have an adjusted Leverage capital ratio of at least 4.50 percent by Dec. 31, 1992, (the actual ratio was 4.08 percent at June 30, 1992), 6.00 percent by June 30, 1993, and 6.50 percent by June 30, 1994 and thereafter as long as the order is in effect. The bank said it anticipates that in order to obtain the capital necessary to meet the 6.00 percent target, the company would need to complete a successful public offering before June 30, 1993. At June 30, 1992, the bank's Tier 1 risk-based capital ratio of 6.03 percent and Total risk-based capital ratio of 7.56 percent were in full compliance with currently applicable minimum requirements of 3.625 percent and 7.25 percent, respectively.
 Pursuant to the order, assets classified "Doubtful" and "Substandard" at Oct. 31, 1991, by the FDIC and the Commissioner are not to exceed 100 percent of total capital plus ineligible reserves at June 30, 1993, and may not exceed 75 percent of such capital and reserves at Dec. 31, 1993.
 Failure to comply with the terms of the agreement or the order could, among other things, subject the company or the bank to a broad range of regulatory sanctions, including civil monetary penalties.
 Edwin F. Hale Sr., chairman of the board, said, "We have already taken steps to address many of the requirements of the agreement and the order. The current board has been responding to the conditions which existed at the time of the proxy contest, and the recent improvements in the bank's earnings and financial condition reflect those efforts. Based on present projections from the previously adopted plan, the board currently expects that the company and the bank will be able to meet the requirements of the agreement and the order. The successful raising of capital in the public offering and reduction in classified assets will, of course, be dependent upon a number of factors beyond our control, including future market and economic conditions and upon the cooperation and success of our borrowers."
 Hale emphasized, "We fully recognize that we have our work cut out for us to achieve these goals and that there is little margin for error in our projections."
 The company also announced that it has engaged the investment banking firm of Kidder, Peabody & Co. to assist in the evaluation of strategic alternatives and their prospective benefits to stockholders, formulate and execute modifications to the strategic plan and serve as lead manager for capital raising.
 In other board action today, Alan M. Leberknight, president and chief operating officer of the company and the bank, was appointed to the board of directors of both companies subject to regulatory clearance. The board also announced that Jay Gouline resigned for personal business reasons. Gouline offered the board his best wishes for continued success and expressed his total support for the board and management's current business plan. On behalf of the board, Hale extended his appreciation to Gouline for his contributions and wished him well in his personal endeavors.
 Baltimore Bancorp is a $2.9 billion Baltimore-based bank holding company. Its principal subsidiary, The Bank of Baltimore, founded in 1818, operates 49 branches within the Baltimore-Washington Common Market.
 BALTIMORE BANCORP
 (In thousands, except per-share data)
 Pct.
 Quarter ended June 30 1992 1991 change
 Results of Operations:
 Net interest income $ 22,039 $ 20,961 5
 Provision for poss.loan losses 13,000 5,220 149
 Other operating income 18,846 8,860 113
 Investment securities gains 339 438 (23)
 Other operating expenses 22,148 22,564 (2)
 Income taxes (benefit) 281 (520) 154
 Income before extraord. item 5,795 2,995 93
 Extraordinary item (A) 0 9 (100)
 Net income 5,795 3,004 93
 Per Share:
 Income before extraord. item $ 0.45 $ 0.24 88
 Extraordinary item (A) 0.00 0.00 --
 Net income 0.45 0.24 88
 Cash dividends declared -- 0.15 (100)
 Average Balances:
 Investment securities $ 708,448 $ 734,293 (4)
 Loans (net of unearned income) 1,678,461 2,265,506 (26)
 Earning assets 2,830,569 3,175,198 (11)
 Total assets 2,974,842 3,349,544 (11)
 Core deposits (B) 2,146,439 2,175,739 (1)
 Total deposits 2,723,270 2,883,995 (6)
 Stockholders' equity 115,262 240,486 (52)
 Earnings Ratios: Pct. Pct.
 Return on average total assets 0.78 0.36 --
 Return on average equity 20.11 5.00 --
 Yield on avg. earning assets 3.13 2.67 --
 Credit Ratios:
 Net loan losses to avg. loans 1.23 0.88 --
 (A) Gain, net of taxes, from early extinguishment of debt.
 (B) Total deposits excluding certificates of deposit $100,000 and over and broker deposits.
 BALTIMORE BANCORP
 (In thousands, except per-share data)
 Pct.
 Six months ended June 30 1992 1991 change
 Results of Operations:
 Net interest income $ 43,234 $ 41,465 4
 Provision for poss.loan losses 17,881 7,270 146
 Other operating income 25,974 13,207 97
 Investment securities gains 2,755 2,777 (1)
 Other operating expenses 42,821 40,668 5
 Income taxes (benefit) 364 1,626 (78)
 Income before extraord. item 10,897 7,885 38
 Extraordinary item (A) -- 198 (100)
 Net income 10,897 8,083 35
 Per Share:
 Income before extraord. item $ 0.85 $ 0.62 37
 Extraordinary item (A) -- 0.01 (100)
 Net income 0.85 0.63 35
 Cash dividends declared -- 0.30 (100)
 Book value 9.27 18.81 (51)
 Common stock mkt. value (NYSE) 7.875 9.875 (20)
 At June 30:
 Investment securities $ 516,551 $ 798,603 (35)
 Loans (net of unearned income) 1,656,633 2,300,270 (28)
 Earning assets 2,735,692 3,251,115 (16)
 Total assets 2,869,320 3,448,599 (17)
 Core deposits (B) 2,093,667 2,184,837 (4)
 Total deposits 2,632,374 2,840,433 (7)
 Stockholders' equity 118,092 239,844 (51)
 Common shares outstanding 12,737 12,748 --
 Average Balances:
 Investment securities 661,900 752,029 (12)
 Loans (net of unearned income) 1,792,847 2,242,543 (20)
 Earning assets 2,907,871 3,204,727 (9)
 Total assets 3,064,653 3,374,573 (9)
 Core deposits (B) 2,202,850 2,162,011 2
 Total deposits 2,823,041 2,898,108 (3)
 Stockholders' equity 111,262 238,844 (53)
 Earnings Ratios: Pct. Pct.
 Return on average total assets 0.71 0.48 --
 Return on average equity 19.59 6.77 --
 Yield on avg. earning assets 2.99 2.62 --
 Credit Ratios:
 Nonperform loans/total loans 10.23 1.62 --
 Nonperform assets/total assets 7.88 2.22 --
 Allowance to total loans 5.34 1.50 --
 Allowance to nonperform loans 52.25 92.43 --
 Net loan losses to avg. loans 0.75 0.74 --
 Capital Ratios (period-end):
 Equity to total assets 4.12 6.95 --
 Tier 1 risk-based cap. (1992) 5.13 7.24 --
 Total risk-based cap. (1992) 6.71 8.31 --
 (A) Gain, net of taxes, from early extinguishment of debt.
 (B) Total deposits excluding certificates of deposit $100,000 and over and broker deposits.
 -0- 7/15/92
 /CONTACT: David L. Spilman, treasurer of Baltimore Bancorp, 800-722-8823/
 (BBB) CO: Baltimore Bancorp ST: Maryland IN: FIN SU: ERN


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Date:Jul 15, 1992
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