A few years back in the energy-busted economy of Texas, depositors could walk home with almost anything from Arabian colts to Rolls Royces, Porsches or Cessna airplanes if they put their money in the struggling First City Bancorporation of Texas.
Buy a five-year, $6 million certifica te of deposit, for example, and take home a 40-foot Hatteras yacht.
The gifts seemed to fit the lending-and-spending spree that was coming to an end there.
Don't look for that kind of bonus here. There aren't even any toaster giveaways. Instead, depositors in the Baltimore-Washington area are finding a much less exotic yet equally attractive prize: the highest rates in the nation.
"It's a sign of the times, par for the course," said John A. Heffern, a banking analyst at Alex. Brown Inc. in Baltimore. "The course is just a little difficult for the moment."
Kicked off by competition, a crashing real estate market and a slumping economy, the scramble to pull in -- and lock in -- depositors' money has become a game of pulling, pushing and stretching CD rates.
As a result, rates offered on many certificates of deposit have given customers a chance to capture big-time returns with small investments.
With as little as $500, Marylanders can walk down the street and receive CD rates that would be tough to match in New York, Los Angeles or at the cash-strapped banks in Boston. Indeed, some five-year certificates of deposit are paying an average annual yield that is higher than what many new homeowners are being charged for mortgages.
Depending on their financial needs, some institutions might just offer the rates locally one week and jump into the national markets the next. Some will pay more for one-year CDs while others will spurn the three-month variety and push hard for the 2 1/2 -year kind.
Maryland National Bank entered the high-rate competition months ago and has been bouncing in and out of the top spot for what it pays on six-month and one-year CDs.
Hopkins Federal Savings Bank in Baltimore captured the No. 1 position a few weeks ago with a five-year CD with a stated annual rate of 8.5 percent, meaning an annual yield of 10.59 percent.
Others, like Second National Federal Savings Bank, sit among the top 20 in virtually every category week after week.
The trick is for banks to match the maturities of the CDs with how long they need the money.
They also must avoid making long-term commitments on deposits that, if interest rates fall, will end up costing more than the bank can earn on the money. They must also avoid collecting the kind of short-term deposits that left many of their colleagues hanging out to dry when, after the certificates matured, depositors took the money elsewhere.
The numbers are indisputable. Eight of the 20 banks and thrifts paying the highest rates on one-year CDs on the national market are either in Maryland or the Washington area, according to 100 Highest Yields, a weekly newsletter that tracks CD rates. Nine of the top 20 in the five-year CD market are located here.
Banks in the Baltimore-Washington area are paying an average effective yield of 8.22 percent for one-year CDs, well above averages in other metropolitan areas and nicely ahead of the national average of 7.4 percent, according to Bank Rate Monitor, which also follows CD and money market trends at financial institutions. Thrifts in the region are offering average yields of 8.07 percent compared with a national average of 7.78 percent.
Rates at banks and thrifts in the area could be even higher than those figures suggest. Newsletters that track the highest rates follow only institutions selling CDs nationally through brokers.
Hopkins Federal, for example, was ranked No. 1 by 100 Highest Yields for only two weeks, but not because it lowered it rates. Instead, once enough deposits were pulled in to satisfy its needs, it went back to offering the high rates only locally.
Consider Maryland National Bank, owned by MNC Financial Inc. in Baltimore and under the new leadership of Alfred Lerner -- a back-to-basics chairman.
As of Friday, one-year CDs at Maryland National were being offered at a stated rate of 8.2 percent -- an effective annual yield of 8.55 percent, down from earlier yields of 8.75 percent in prior weeks but still the second-highest among those trading nationally.
"Lerner likes deposits," said company spokesman Daniel G. Finney. "CD-type deposits with a predictable term are a stable source of funding. It's a competitive marketplace, and there are a lot of people out there chasing depositor money."
But competition and a love of deposits is just part of the answer, analysts said.
While depositors rake in the gains, the fear among others is what the high rates signal.
High rates can signal an industry in distress. Despite the attention and deposits that First City attracted by its promotion, for example, it ended up needing $970 million in federal assistance and $500 million in fresh capital by early 1988.