Alex. Brown Inc., Baltimore's oldest investment banking firm, reported yesterday that it had a net loss of $3.1 million in the third quarter, compared with a $6.3 million profit in the same period a year ago.
The firm attributed the quarterly loss -- its second in less than two years -- to a decline in revenues from trading securities in a stock market that has taken a nose dive because of the threat of war in the Middle East and the threat of a recession at home, spokeswoman Wanda Felton said.
In particular, Alex. Brown sustained losses during the quarter from several stocks held in inventory, "one of which was related to a recent offering where Alex. Brown was a managing underwriter," Donald B. Hebb Jr., president of the firm, said in a statement.
Alex. Brown declined to say which stock offering Mr. Hebb meant.
"I'm afraid we're not able to disclose information about particular offerings or about any stocks in inventory," Ms. Felton said.
The stock market plunged in the wake of the Iraqi invasion of Kuwait Aug. 2.
Alex. Brown was a managing underwriter in seven initial public stock offerings in the weeks just before or after the invasion, according to the firm's list of public offerings in which it has participated during 1990.
Five of those seven offerings have been battered by the stock market downturn. Shares of In-Store Advertising Inc., which were at $19 a share July 19, closed Monday at $3.75 a share. Shares of BizMart Inc., at $15.75 July 18, closed at $6.375 Monday.
Alex. Brown's other recent quarterly loss was in the first quarter of 1989, when the firm reported a loss of $6.3 million after it wrote down its rental of excess office space, said Beverly Wright, chief financial officer.
"We had signed up for space that was in excess of our requirements as the market was shaking out after the crash," she said.
Alex. Brown reported that in the third quarter of this year, which ended Sept. 28, its revenues dropped 27 percent, to $58 million, from $79.6 million in the third quarter of 1989.
During the first nine months of 1990, revenues declined 3 percent, to $203.7 million, from $210.5 million during the first nine months of 1989, Alex. Brown said in its statement.
Net earnings for the period were $3.9 million, or 25 cents a share, down from $4.3 million, or 26 cents a share, for the first nine months of 1989.
"In times such as these, capital strength is especially important," Mr. Hebb said in a statement.
"Alex. Brown's capital funds remain very strong, totaling $191.7 million at the end of the third quarter with a book value of $11.33 per share."