Credit-rating agencies offered a sign of approval yesterday to MNC Financial Inc., but some of the area's businesses were less sanguine about working with NationsBank Corp., the country's fourth-largest banking company.
The announcement Thursday that Charlotte, N.C.-based NationsBank would exercise its option to buy Maryland's largest bank ended seven months of speculation. The $1.36 billion deal still awaits the approval of federal regulators and the shareholders of MNC, the parent of Maryland National Bank and American Security Bank in Washington.
But for some small businesses the news generated mixed emotions: relief that MNC will be acquired by one of the nation's strongest banking companies, but concern that Baltimore and Maryland will lose another strong local presence, and regret that long-established banking relationships may be threatened.
"Maryland National has made it clear that we're very important to them," said Michael Gisriel, senior vice president of the Baltimore-based Fountainhead Title Group, one of Maryland's largest title companies. "And we want to make sure that we're going to be important to the new entity.
"I think everybody's a little nervous. We don't know that the guys we're talking to today are going to be the guys we're talking to a year from now," Mr. Gisriel said. "The people we bank with aren't only our business partners -- a lot of them are our friends."
MNC's president and chief executive, Frank P. Bramble Sr., met with a group of 90 senior executives early yesterday morning, but he was unable to tell them what they most wanted to hear: who would stay and who would go, according to an MNC spokesman. It will be several weeks before the two companies decide who will serve on the committees charged with organizing the expected merger.
Mr. Bramble was able to relate the news that MNC's debt ratings have been marked for a likely upgrade by Standard & Poor's Corp., Duff & Phelps Credit Rating Co. and Moody's Investors Service.
That should help the company's commercial lenders convince potential customers that MNC is healthy enough to do business with, said spokesman Daniel Finney.
The imminent end of MNC was good news to some who felt the company has been unresponsive to small businesses. Baltimore property manager Stephen L. Hoffman said he still remembers the coffee mug incident back in 1989. At the time, he said, "we were depositing about $300,000 a month in gross revenues" with MNC, but the company refused to consider Mr. Hoffman's proposal to discount his banking fees as his transaction balances rose.
"They gave me and my partners coffee mugs and told us they would get in touch with us," Mr. Hoffman said. "Six months later, and no word, and I was looking for another bank." He ended up with First National Bank of Maryland, which he said has "bent over backwards" for his company, Metro Property Management Inc.
Likewise, some businesses anticipate a better climate for borrowing money once NationsBank takes over MNC. "It should be a big help to us,the small business," said Cliff Rudo, vice president of Rudo Sports Inc., the retail sporting goods chain.
NationsBank itself is eager to ease the fears of those who view the company as a carpetbagger, with no autonomy among its local lenders. "We do not approve loans and credit commitments in a credit committee," said William A. Hodges, a NationsBank executive vice president for business lending in Bethesda.
"Our philosophy is that for accountability, these decisions have to be made by the lending officers."
NationsBank has made $600 million in loan commitments in the Washington area during the past year, Mr. Hodges said. And partly because of its strong credit rating, the company was selected this week to write a letter of credit backing an "eight-figure" bond issue by the Maryland Health and Higher Education Financing Authority.
"Maryland National could not issue that letter of credit because their bond rating is not acceptable," Mr. Hodges maintained.