New mutual funds sail into townThe Ark was the first ship...

BANKING & FINANCE

August 26, 1993|By David Conn | David Conn,Staff Writer

New mutual funds sail into town

The Ark was the first ship to arrive in Maryland from the Old Country in 1634. So it's only fitting that Ark should be the name of a new family of mutual funds from First Maryland Bancorp, parent of the First National Bank of Maryland.

For now, only trust account customers of First National may invest in the seven funds, which include four fixed-income funds and three equity funds, according to Jennifer Lambdin, First National's senior vice president for trust investments.

Since the funds were converted from trust accounts in June and July, the Ark family has about $500 million in assets. The bank has filed for permission with the Securities and Exchange Commission to expand the funds' scope to retail customers, too. Right now they're all no-load, but Ms. Lambdin says the company is still deciding whether to make the retail class of mutual fund shares no-load, too.

First National's funds are the latest example of a nationwide trend among banks. Mercantile and NationsBank are among the local banks that sell proprietary mutual funds. Out of 3,078 mutual funds in Morningstar Inc.'s nationwide data base, 370 were offered by banks as of July 31.

First National's funds, like those of all the other banks getting into the business, are intended "to put us on a more competitive footing with some of the brokerages and mutual fund companies," Ms. Lambdin said.

Also, the funds will allow trust customers to look in the newspaper each day to see how their investments are performing.

Incidentally, there are other reasons why the name Ark was chosen: in addition to being part of the Maryland state symbol, an ark is part of the logo of First Maryland's parent, Allied Irish Banks PLC. Plus, it puts First Maryland's funds near the top of the alphabetical mutual fund listings.

Private banking piques Provident's interest

In their never-ending quest for new products and services that don't rely solely on the fickleness of the interest rate spread, more and more banks have been turning to private banking. This can mean anything from offering a higher-priced package of personalized asset management for well-heeled customers, to serving tea and wine in a plush room away from the tellers' windows.

Provident Bank of Maryland isn't quite sure what its version of private banking will look like, but it wants to get in on a good thing.

This month, the company charged Bradley Sanner, a managing director in the commercial lending division, with studying the concept of private banking and developing a version that makes sense for Provident's customers.

The key issues, according to marketing director Robert Quin

lan, are customer demand and the commercial feasibility. "Does it bring some added value, and can we do it at a profit?"

Mr. Sanner, who was on vacation this week, probably will have something ready by the end of the year, Mr. Quinlan said.

Price earns praise for ending MRT saga

T. Rowe Price Associates Inc. decided two weeks ago to end an embarrassing chapter in its recent investment history, and sell the remaining $34.6 million of debt it held from the bankrupt Mortgage and Realty Trust, which went into Chapter 11 in 1992.

The decision meant Price took a $110,000 pretax loss, after writing the debt down to $34.5 million from $46.5 million. So what are the analysts saying?

* Ira H. Malis, Alex. Brown & Sons: ". . . a significant positive for the company."

* Richard Goleniewski and Robert Hottensen, Goldman, Sachs & Co.: "positive news . . .," and "eliminates considerable uncertainty . . ."

* Dean Eberling, Lehman Brothers: ". . . the company is significantly, dramatically, materially better off with the proceeds in hand rather than hoping, praying, wondering if MRT would ultimately unwind at 100 cents on the dollar at some future date."

Day dawns anew at Arundel Federal

On Monday, the 6,300 depositors of the failed Irvington Federal Savings Bank were greeted to a change, courtesy of the Resolution Trust Corp. Their accounts were shifted to Arundel Federal Savings Bank, in a deal that included Glen Burnie-based Irvington's $27.6 million in insured deposits and about $23 million of its assets.

Origins of the deal came this spring, when the Resolution Trust Corp. managed to find an extra $5 billion hidden under the cushions. It placed 23 thrifts -- including tiny Irvington Federal Savings Bank, with $31 million in assets -- on a list to be marketed aggressively to potential buyers.

Not included in the Arundel Federal deal are some loans in Irvington's servicing portfolio, and its three branch buildings, in Baltimore, Glen Burnie and Pasadena. But Arundel Federal President Robert C. Gehrman says he'll consider buying the buildings if the RTC makes him a decent offer.

Irvington's troubles stemmed from its 1986 takeover of Germania Federal Savings and Loan. When the federal capital rules changed in 1989, Irvington no longer could count the goodwill from that purchase as capital, and it fell below federal guidelines. In February 1992, the Office of Thrift Supervision stepped in.

Arundel Federal, which has $209 million in assets, paid a premium of $1.8 million above the assets. The final cost to taxpayers was $2.7 million, according to the RTC.

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