Ex-president remains active at Alex. BrownIt's been almost...

BANKING & FINANCE

December 03, 1992|By David Conn

Ex-president remains active at Alex. Brown

It's been almost two years since Donald B. Hebb Jr. stepped down as president of Alex. Brown Inc. At the time, he cited an interest to "serve the firm's clients more directly" -- a corporate euphemism to explain his defeat in a power struggle with the current CEO, Alvin "Buzzy" Krongard.

But Mr. Hebb hasn't faded away. He has been handed the reins of the company's new merchant banking business, and already Mr. Hebb and a colleague hold equity interests for Alex. Brown in four companies, participating actively in their management.

President Mayo Shattuck III said that once those investments become a bit more liquid, Mr. Hebb probably will be given authority to start a merchant banking discretionary fund, with at least $15 million to invest.

The merchant banking business symbolizes the company's desire to reduce its dependence on cyclical stock trading

commissions. Another example: Chesapeake Advisory & Trust Holdings Inc., a money management joint venture announced last week between Alex. Brown and Philadelphia-based Glenmede Corp., a trust company that manages $7 billion for wealthy people.

Baltimore native to lead management venture

Speaking of Chesapeake . . . Alex. Brown and Glenmede have found a chairman and chief executive officer for their Baltimore-based venture: David L. Hopkins Jr., a Baltimore native who has been with J.P. Morgan & Co. for the last 40 years, most recently as co-head of asset management and private banking.

Mr. Hopkins, a Princeton University graduate, is a director of the Metropolitan Opera Association, a trustee of the Episcopal Church Foundation and a director of Westvaco Corp.

"Through my family, I have maintained a continuing interest in Baltimore over the years," he said in a statement. "For my wife and me to return to such a wonderful community is a great plus."

Firms looking for buys or buyers can advertise

Local companies without the size and clout of a NationsBank may find they are limited by geography in their ability to find a potential acquisition or acquirer.

Now, the Baltimore accounting firm of Kamanitz, Uhlfelder & Permison has a way for local companies to go national. The company is a member of Accounting Firms Associated Inc., a group of independent accounting firms with offices in 33 states. AFA coordinates a confidential listing service for businesses that are looking to sell or buy, identified only by industry type and geographic area.

Companies must have 25 or more employees; at least $3 million in sales; or at least $300,000 of net income and owner DTC compensation. Larry Kamanitz of Kamanitz, Uhlfelder is the person to contact for more information.

Price's stock is a buy, Oppenheimer says

Oppenheimer & Co. says buy shares of T. Rowe Price Associates. In a weekly portfolio review, the New York investment company said Price "is poised to take advantage of what we view as the two most important secular mutual fund trends," namely the growth in defined-contribution pension assets, and consolidation in the mutual fund industry.

The first trend saw defined-contribution assets, those in which an employer sets aside a predetermined amount of retirement money for employees, grow 19 percent a year from 1980 to 1988. By 1995, those assets should reach $1.3 trillion, Oppenheimer estimates. That will benefit Price because employers favor multifund families to give their workers a choice of investments, and they prefer no-load funds.

The second trend, industry consolidation, should see "only the largest no-load fund complexes" succeeding in the defined-contribution market, according to Oppenheimer.

Record sales of mutual fund shares, driven in part by low interest rates, will abate, but only slightly, in the next quarter or so. Price should earn 66 cents a share in the fourth quarter, compared with 56 cents a year ago.

Finally, with its stock trading at only 2.5 times its advisory revenues, compared with up to four times revenues for some industry members, Price could reach $50 a share within a year to 18 months, Oppenheimer believes. The stock closed yesterday at $43.50, down 25 cents.

Cost of check fraud put at $568 million a year

As if bankers didn't have enough things to worry about, here's one more: check fraud. The American Bankers Association reports that check fraud costs commercial banks $568 million a year.

For the first time, the ABA survey included check "kiting," cases in which a check is written against uncollected or non-existent funds for fraudulent purposes, distinguished from non-fraudulent overdrafts and clearly criminal forgeries.

The ABA found that large banks were much more likely to be hit by check fraud than were small ones, despite more extensive management training, signature verification and high-tech image processing. For all banks, recoveries averaged only 13 percent of initial losses.

"All it takes is one experience to wake up a bank to the problem," said Robert B. McDonald, executive vice president of Riggs National Bank and chairman of the ABA's Check Fraud Task Force.

The task force is considering new security features for checks, and helping vendors develop equipment to detect substandard checks.

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