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Md. bank ratings slip in national study A few institutions bring average down


Maryland banks' financial standing slipped during the second quarter of 1991, according to a new report by IDC Financial Publishing Inc., and the study's editor said the next report will show that the slide continued during the third quarter.

"Two or three or four of them are dragging down the total; you've got a real dichotomy in the state" between strong and weak banks, said John E. Rickmeier, chief executive of IDC and editor of Bank Financial Quarterly, which the Wisconsin-based research firm publishes.

Mr. Rickmeier said the weak rating of MNC Financial Inc., the parent of Maryland National Bank and the state's largest bank holding company, helped hold the average rating of Maryland banks to 138 on a scale of 300 as of June 30. The national average was 143 for the period.

But MNC spokesman Daniel G. Finney said "the picture has changed considerably since six months ago." The company has been disposing of non-performing assets at the rate of $200 million every three months, and deposits have increased every month since March, he said.

MNC's $100 million cost reduction effort, started in March, was completed at the end of the year, Mr. Finney said. "We are now moving forward with $100 million in expenses removed from our income statement," he said.

A big dip in the score of The Bank of Baltimore helped pull down the Maryland average. The bank's score fell to 96 from 138, and Mr. Rickmeier predicted it would fall again in coming reports because of major losses reported in last year's third and fourth quarters.

Those losses came when the bank's new management reclassified loans as non-performing and added millions to loan loss reserves.

The Maryland and national averages for the second quarter fell into IDC's "average" rating, meaning IDC says the average bank has adequate capital but has "marginal problems" that demand changes to boost profits.

Detailed assessments of an individual bank's soundness are available from IDC Financial Publishing, which is based in Hartland, Wis.

A number of other banks have reported significant events since the date of the ratings:

* First American Corp. and its subsidiary, First American Bank Maryland. The bank holding company, which allegedly was controlled by the failed Bank of Credit and Commerce International, should benefit from a proposed plea agreement under which the international bank holding company would forfeit $275 million to First American and another former BCCI property, the Independence Bank of Los Angeles.

BCCI, which is on trial in U.S. District Court in Washington charged with racketeering, entered a guilty plea Jan. 9 in which the company agreed to surrender $550 million in U.S.-based assets.

* FWB Bank of Rockville. The bank has undergone a significant restructuring in the last year that has reduced its assets from $70 million at the end of 1990 to $47 million at the end of last year, said Steven K. Colliatie, president and chief executive officer of the bank.

"We have re-evaluated all of our line items," he said. As a result of the restructuring, the bank had a profit in the fourth quarter last year and it is expected to report a profit this year, he said.

* Maryland Bank & Trust Co. John P. Daugherty, president of the Southern Maryland bank for 32 years, said its ranking is lower than it should be. He said bank regulators have undervalued its real estate and classified more assets as non-performing than necessary. "My capital is way above what they rank us because I have very good real estate," he said. "I run business to make money, not to satisfy the examiners," he said, adding that the bank has had more than 15 profitable years.

* Riggs National Corp. and its subsidiary Riggs Bank of Maryland. The Washington-based bank announced in October that it would sell $200 million in troubled commercial real estate assets, including some in Maryland, in an attempt to make the bank profitable. The bank said it would sell the properties at a discount and pay for the program from a reserve fund of $50 million.

* Signet Bank/Maryland. The bank's Richmond-based parent company, Signet Banking Corp., announced in January that it would try to dispose of $400 million in repossessed real estate and real estate-related loans this year by selling them, writing them down or by having borrowers repay their loans. That amounts to about a quarter of Signet's total commercial real estate loans.

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