Bank of Baltimore works to raise capitalDespite the Dec...

BANKING & FINANCE

December 24, 1992|By David Conn

Bank of Baltimore works to raise capital

Despite the Dec. 19 "nonsurprise" -- the day new capital

requirements were supposed to sink dozens of banks -- many banks and thrifts are still scrambling to raise capital. One reason: the cost of deposit insurance premiums. On Jan. 1, the Federal Deposit Insurance Corp. will raise insurance rates from 23 cents per $100 of deposits to as much as 31 cents for the weakest institutions.

The Bank of Baltimore, the main unit of Baltimore Bancorp, needed to raise its risk-based capital ratio to 8 percent, from 5.42 percent at the end of last year. The Sept. 30 deadline to avoid the largest increase in insurance premiums has passed, but the company hopes to appeal its rate hike if it meets its 8 percent goal, says Treasurer David Spilman.

The company expects to pay about 15 percent more next year than the $6.5 million in insurance premiums it paid this year. But that expense could be reduced if the bank achieves its goal and the FDIC agrees to lower the insurance rate.

Last week one of the company's largest debt holders, an insurance company it declines to name, agreed to swap $1.5 million in long-term debt (with a 10.875 percent coupon, due in 1999) for 224,000 shares of common stock, worth $1.5 million.

Meanwhile, the parent Baltimore Bancorp has sold 515,000 shares of new stock, worth $3.2 million, to existing shareholders so far this fall, and Mr. Spilman said the company will "still consider the possibility of going to the equity markets" in mid-1993 to raise even more capital.

Teen holding his own in stock competition

Youth may be wasted on the young, but money isn't. Not at Byron Warnken's house, at least.

The 14-year-old McDonogh School eighth-grader currently has the fourth-best portfolio in the fifth annual AT&T Collegiate Investment Challenge. The college and high school stock trading competition runs from November through February.

Halfway through, Byron has outperformed nearly 20,000 others and turned a fictional $500,000 account into $705,793, a 41 percent return in less than two months.

His strategy? "Mostly cheap stocks, around $1 [a share], because you can buy more shares." He hasn't been able to buy the really cheap stocks, because the contest forbids buying more than 50 percent of the previous day's volume in any one stock.

He's also made money on companies targeted toward his peers: Walt Disney Co. and Marvel Entertainment Group. And he favors buying on weakness. When Comptronix Corp. fell 16 points, or 72 percent, in one day because of a financial scandal, Mr. Warnken snatched up 30,000 shares. He dumped them after they rose 3 points or so.

Byron has been investing in modest amounts for about two years, backed by his father, an attorney.

If he should finish in fourth place or higher, Mr. Warnken stands to win from $5,000 to $10,000 in cash, and other prizes. And what would he do with the money?

"I'll probably invest most of it."

Two new banks set up shop in Md.

Bid welcome to two of Maryland's youngest banks, both created out of a desire to produce efficiencies and cut costs.

On Dec. 10, Montgomery National Bank and Prince George's National Bank, both units of Bethesda-based Allegiance Bancorp, merged to become Allegiance Bank N.A. The institution has five branches in the two counties and about $100 million in assets.

And in Western Maryland, Oakland-based Garrett National Bank merged with Liberty Bank of Maryland, in Cumberland. The new company, formed on Dec. 7, is called American Trust Bank N.A. and has just more than $300 million in assets at 17 branches in Allegany and Garrett counties, said Senior Vice President David L. Prough, of the parent WM Bancorp, based in Cumberland.

"It was kind of like a rebirth," he said.

Acting? It's just a hobby for broker

OK, so it's not Shakespeare . . .

Chapin, Davis broker Bev Brown, a sometime "extra" in TV shows and movies, got his first speaking role, on the national television show, "Unsolved Mysteries." Last night, Mr. Brown appeared as the father of a child who recovered from a coma, seemingly with a little help from a long-dead saint.

Next stop, Hollywood? Not a chance. "I did 'Unsolved Mysteries' and that's it -- I'm a broker," he insists. Besides, "I opened up two accounts while I was doing it."

Deck the halls with boughs of money

And finally, we pass along the greediest Christmas card to arrive at the business desk of The Sun. From Technical Data, a Boston-based market analysis division of Thomson Financial Services, here's a holiday wish-list even Scrooge would love:

"On the twelfth day of trading the market gave to me,

"Twelve year-end payouts,

"Eleven bullish pennants,

"Ten Sterling Marks,

"Nine short sellers,

"Eight funds a-buyin',

"Seven repo specials,

"Six yields a-droppin',

"Fiiiive Elliott Waaaaves*,

"Four corporate deals,

"Three buying tails,

"Two payroll drops,

"And a trend line clear enough to see."

(*musical interpretation added)

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