Provident Bank finds annuities to its likingWhen Provident...

BANKING & FINANCE

November 19, 1992|By David Conn

Provident Bank finds annuities to its liking

When Provident Bank of Maryland entered the insurance business last year, it chose not to dive in headlong. The company stuck its toe in, leasing space in a branch to three representatives of Essex Co., a New York firm that sells insurance annuities to Provident's customers.

Now Provident has decided the water is fine. The company has asked the state for permission to buy the local Essex Co. subsidiary, called Provident Investment Center Inc., which won't amount to much more than transferring the employment of the three salespeople. Eventually, Provident hopes to get its branch employees educated and licensed to sell the annuities.

PIC was established "as a defensive measure, because there were a lot of other institutions offering [insurance products], and we were losing deposits," said Louis R. Taylor, Provident's managing director for community banking.

That same logic apparently applies to mutual funds. The company also has asked for permission to lease space to an Essex Co. subsidiary to sell funds, which Mr. Taylor expects will start by next month.

"Our customers have basically told us that the interest rates we offer just aren't enough in this low-interest-rate environment," Mr. Taylor said, "and they've voted with their feet."

Small businesses seek help with credit

Maryland's small businesses have decided to use the carrot instead of the stick. In their fight against what they see as a continuing credit crunch, a coalition of small businesses is calling for a legislative package to create a "community preferred banking program," to encourage banks to make loans to small companies.

This month, at a meeting of the Chamber of Commerce's Small Business Council, more than 60 small business owners and advocates formally called for a program of tax relief for small business lenders, loan guarantees from the state and standard loan documentation. The program also would encourage small businesses to work with their accountants and lawyers to provide lenders reliable, detailed information.

The small businesses are sure to face a fight on proposals that carry a price tag. Legislators in January will be preoccupied, once again, with finding ways to cut spending, not increase it.

MBNA to expand Towson operations

MBNA Corp., the Delaware credit card issuer, is strengthening its ties to the Baltimore market -- slightly. The company, until last year a unit of MNC Financial Inc., has applied for and received permission from the state bank commissioner to add to its operations in Towson.

The company has been granted approval to create or complement three subsidiaries: MBNA Consumer Services Inc., to make consumer loans secured by second mortgages; MBNA Marketing Systems Inc., a telemarketing facility for the credit card operation; and MBNA Payment Systems Inc., to handle credit card processing and other services.

MBNA already employs about 525 people in a telemarketing operation in Towson, according to spokesman David Spartin. The Consumer Services operation will be new, with headquarters at the home office in Newark, Del. Any further hiring, Mr. Spartin said, will be "insignificant." Of course, every little bit counts these days.

Analyst rates MNC 'relatively attractive'

MNC Financial Inc. has a new fan: Felice M. Gelman, banking analyst at Dillon Read & Co. Inc. Ms. Gelman recently upgraded MNC's stock from 3 to 2, or from "neutral" to "relatively attractive."

Ms. Gelman argues the company's stock price doesn't yet reflect a NationsBank Corp. acquisition, which she believes will happen "sooner rather than later."

The agreed-upon multiple price of 1.25 times book value could exceed $15.75 a share by next year if unrealized securities gains are included. That would mean a 37 percent return for those who bought the stock today, if the deal goes through before the end of September next year, as Ms. Gelman predicts.

"As an arbitrage, MNC -- although speculative -- appears to offer an interesting return," she writes.

Job losses in banking expected to taper off

Here's the good news: The nation will lose 16,800 more banking jobs by the end of March 1993, according to Bank Employment News.

That's good news? It is if you consider that the industry lost more than 118,000 jobs from January 1990 through September 1992 -- and almost 75 percent of those jobs disappeared by May of this year, according to the publication.

"Since then we've seen a significant moderation in the rate of decline," said Frank Marafiote, Bank Employment News editor. "Our forecast through the first quarter of 1993 is actually a good sign for the industry and an indication that the recession's impact on banks is beginning to lessen."

BEN bases its forecasts on data from the U.S. Department of Commerce, the Bureau of Economic Analysis and the Department of Labor's Bureau of Labor Statistics. The publication's predictions have been nearly dead on, according to a graph the company provided that goes back to January 1990.

There's even better news for savings bank and credit union employees. Their industries showed a gain of 8,000 jobs in the first nine months of this year, said BEN.

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