BALTIMORE - Baltimore Bancorp, parent company of the Bank of Baltimore, agreed to cease and desist order issued by the Federal Deposit Insurance Corp. and Maryland's bank commissioner.
The agreements prohibits the payment of cash dividends and certain transactions between the parent company or its affiliates with the bank without prior regulatory approval. (The company's board suspended dividend payment last October.)
The company also reported net income of $5.8 million for the second quarter, up 93% from a year earlier.
Written Policies Demanded
The pact with regulators requires the parent company, which has $2.9 billion in assets, to provide 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 accord limits certain parent company borrowings and payments without regulatory approval, Baltimore Bancorp said.
The order requires that the bank obtain 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.
It is 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.
Kidder Peabody Tapped
The company also said it hired the investment banking firm Kidder, Peabody & Co. to help evaluate strategic alternatives, formulate and execute modifications to the strategic plan, and serve as lead manager for raising capital.
The agreement and order relate to problems that were created before Sept. 11, 1991, when a majority of the current board took office after a proxy contest.
The principal components are consistent with the company's financial and strategic plans as approved by the board earlier this year.