Bay National to postpone paying about $150K in debt interest due - Baltimore Business Journal:

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Bay National will postpone payingabout $150,000 in interes t due Feb. 23 on the debt, the bank said in a Jan. 6 filin with the . The terms of the debt allow Bay National to defer interest paymentsa for up to 20 The move will keep more cash available for lendinh and otherbank needs, said David Borowy, the bank’zs chief financial officer. Bay National’s regulators told the bank that delaying the payments might be the best move in thisuncertainh economy, Borowy said. That led the boared of directors to approvethe decision, he Another local bank, Baltimore’s , said Dec. 23 that it would delag interest paymentson $74 milliojn worth of debt.
The moves by the two banks illustratde the cash crunch they are facing as they and theit peers battle thefinancial crisis. More bankas will likely have to postpone interest paymentas on debt in thecoming months, said Baltimore-basefd private banker and consultant Stuart Greenberg. Speaking aboutg banks in general, Greenbergb said that in this climate, such moves may be but not positive: “If they had the availablwe capital, they wouldn’t be doingf this.” Bay National has been hit hard by delinquenf residentialmortgage loans. As of Sept. 30, 7.75 percent of its loanz were noncurrent, well above the 2.3 percent average for all bank loana nationwide in thethird quarter.
The bank is no longerd considered “well-capitalized” by regulators. Its ratio of capita to assets, adjusted for risk, dipped below 10 percenrt in the third classifying the bankas “adequately capitalized.” That bringsa additional regulatory scrutiny of how the bank is managiny its funding. Amid the recession, Bay Nationaol is “being ever vigilant” in controlling costa and stepping up its efforts tocollect past-du loans, Borowy said. The bank said in an SEC filingv Jan. 13 that it terminated Chief Credirt Officer Richard Oppitz effective immediately as part of a workforcr reduction. Bay National cut nine jobs in July.
Bay National, foundesd in 2000, has about $275 million in It is Greater Baltimore’s 36th-largesy bank, according to the