Chairman's optimism boosts Baltimore Bancorp stock


WASHINGTON -- Baltimore Bancorp stock has risen more than 41 percent over the past three days after bullish remarks by the company's chairman at its annual meeting.

Chairman Edwin F. Hale Sr. told stockholders Wednesday that Baltimore Bancorp expects continued profitability from its core operating businesses, assuming loan-loss provisions are consistent with those recorded in the first quarter.

The stock of the troubled banking company has risen to $8.50 a share from $6 since Mr. Hale's rosy forecast. Trading volume totaled 3.89 million shares Wednesday and 4.67 million shares Thursday, well above the average of 689,000 shares a day for the past three months.

The company's stock traded an additional 594,200 shares yesterday, closing at $8.50, up 87.5 cents a share. The company, parent of the Bank of Baltimore, has 12.7 million shares outstanding.

"Our first-quarter profit of $5.1 million has set the pace for the coming quarters and includes $2.7 million from the company's core banking operations," Mr. Hale said.

"So far this quarter, our net interest margin is growing, fee income is increasing, expenses are controlled, liquidity is high and capital ratios are improving."

David Spilman, director of investor relations at Baltimore Bancorp, attributed the rise in the stock to "an awakening on the part of investors.

"We have been telling the same story for a month and a half, since the first quarter earnings came out, but it was overshadowed by negative press coverage of other events concerning the bank," Mr. Spilman said.

Those events included the resignation of five directors and one key Baltimore Bancorp executive in February and a $1.7 million cash severance payment to retiring Chairman Harry Robinson.

The company also wrote off $5.3 million on $13.6 million in loans to a pair of real estate partnerships affiliated with former board member Richard Manekin and a member of his family.

Tom Garrecht, a bank analyst at East Shore Partners, said the rise in Baltimore Bancorp stock is only partly the result of the upbeat annual meeting. Much of the stock's movement is tied to a broad rise in lower-quality banks in the mid-Atlantic region, he said.

For example, New Jersey-based Constellation Bancorp has risen to $6.50 a share from $3.50 earlier this month. Maryland-based MNC Financial has risen to $11.125 a share from $7 in early April; Washington-based Riggs National Corp. has risen to $8.50 from $6.50 May 8; and Midlantic has risen to $13.75 a share from $8 May 8.

Under a Federal Deposit and Insurance Corp. rule effective June 16, Baltimore Bancorp and other weakly capitalized bank holding companies will be restricted from accepting brokered deposits. The bank had about $623 million of brokered deposits at the end of the first quarter.

Mr. Spilman said the rule won't be a problem, because the bank no longer accepts brokered deposits.

Baltimore Bancorp recently had to restate its fourth quarter provisions for loan losses and real estate owned expense after an FDIC examination. The revisions caused the company's net loss for the fourth quarter to increase by $25 million.

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