Failed Calif. REIT may have silver liningEdward Taber, who...

BANKING & FINANCE

August 20, 1992|By David Conn

Failed Calif. REIT may have silver lining

Edward Taber, who until last month was T. Rowe Price's fixed-income guru, will take over Legg Mason's asset-management division after Labor Day. If he ultimately succeeds Legg's Chairman Raymond "Chip" Mason, as some predict, Mr. Taber may look back to the 1990 bankruptcy of a California real estate investment trust as the spark of his recent success.

The Prime Reserve Fund, which Mr. Taber indirectly supervised as head of the fixed-income division, was one of several Price funds that bought $64 million of debt in Mortgage & Realty Trust during the two years before MRT's Chapter 11 filing in April 1990.

Neither Mr. Taber nor the fund's manager sat on the T. Rowe Price credit-approval committee that OK'd MRT as a suitable investment. And, by all accounts, the bankruptcy came out of the blue. Still, in the wake of MRT's troubles, the fund's manager was dismissed, Mr. Taber's pay was cut, and he was removed from Price's six-member management committee.

The board of directors also authorized an assessment of Mr. Taber's management of the division -- "lax" -- and, though the company did not kick him out the door, several observers agree that his departure was inevitable from that point.

Price Chairman George Collins insists that MRT had nothing to do with Mr. Taber's departure, either from the management committee or from the company. Only the pay cut -- which Mr. Collins and three other top executives also suffered -- was MRT-related, according to the chairman.

Mr. Taber, on vacation, said through a spokesman that his departure from Price was unrelated to MRT. And Legg Mason officials say they're happy to have him and that he was wooed by at least two national finance powerhouses but chose to remain in Baltimore.

Back at T. Rowe, only one person is still at the company who sat on the credit-approval committee during the MRT saga: George Collins.

Shelly is Legg man for wealthy investors

Legg Mason is borrowing from Goldman Sach's playbook. Actually, Chairman Chip Mason went out and stole a player from his New York competitor. Last month, Goldman broker Thad Shelly joined Legg to start a new service strictly for high-net-worth customers, those with at least $10 million to invest, according to an internal memo that introduced the rest of Legg Mason's troops to Mr. Shelly. (A spokeswoman said the fine details of the program haven't been worked out yet and that the memo shouldn't have been that specific about what constitutes net worth.)

By all accounts Mr. Shelly, 39, is a talented broker and likely will have a staff of assistants and researchers devoted solely to him. But some of Legg's retail brokers are bristling, justifiably or not, at the idea of someone coming in and targeting wealthy customers.

They note that Goldman, with a mere 200 brokers, tended to assign new customers to a specific broker, according to his or her specialty or geographical region. Legg has close to 10 times as many brokers and the company's attitude is closer to every man for himself.

Mr. Shelly will have the leeway to seek customers nationwide, and some brokers suggest he'll need it, because just about everyone in Baltimore with $10 million to invest already has a broker to invest it.

MNC deal raises hopes at Baltimore Bancorp

Last month's proposed acquisition of MNC Financial Inc. by NationsBank Corp. still leaves at least one local banking company in play. Baltimore Bancorp hasn't tried to hide the fact that its health regimen, in many ways mirroring MNC's own continuing recuperation, could lead to the sale of the parent of the Bank of Baltimore. That is, if anyone considers it a prize worth winning.

The MNC deal could help Baltimore Bancorp in two ways, investor relations chief David L. Spilman argues. First, any out-of-state bank that still wants to enter the wealthy Baltimore-Washington market now has one choice fewer. Baltimore Bancorp, with almost $1.9 billion in assets, is still one of the few independent banking companies of any size in the region. But with a whopping 7.9 percent of its assets classified as non-performing on June 30 (vs. 3.2 percent for Salomon Brothers' 50-bank index on Dec. 31, 1991), the company still has much primping to do before it'll be ready to entertain potential suitors.

Second, the complicated "stakeout merger" that MNC's Alfred Lerner and NationsBank's Hugh McColl negotiated could inspire a similar deal for Baltimore Bancorp, which, like MNC, must reduce its portfolio of troubled assets and, unlike MNC, raise its capital ratios substantially before anyone will take it seriously as a merger candidate.

Danz picking winners at Oxford Capital

John G. Danz Jr., chairman of Towson-based Oxford Capital Management, may not be prophetic, but he apparently knows how to pick and hold a good stock or two.

His company, which manages about $300 million in assets for institutional and individual clients, ranks No. 1 among the nation's balanced portfolio managers for long-term investing, according to Pensions & Investments magazine. The company's 10-year rate of return (as of March 31, net of fees and transaction costs) was 21.9 percent.

Mr. Danz is an alumnus of the former Baker, Watts and of First National Bank of Maryland and Mercantile Safe-Deposit & Trust Co.

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