Baltimore thrift takes shares publicAnother mutual thrift...


September 30, 1993|By David Conn | David Conn,Staff Writer

Baltimore thrift takes shares public

Another mutual thrift is going public, and if Peter Lynch and others are right, this could be a rare investment opportunity.

American National Savings Bank F.S.B., a Baltimore thrift with nine branches and $383 million in assets, this week started selling shares to the public through a division of Ryan, Beck & Co. The thrift's holding company owns 1.9 million shares and will sell between 500,000 and 900,000 shares, at $10 apiece, the prospectus says. The deadline is Oct. 21.

Former Fidelity Investments guru Lynch and others view thrift conversions as a sure thing: A mutual thrift is owned by the depositors, and most of the new shares will be sold to those depositors and the thrift's executives. Because of that, and federal regulators' desire to attract capital to the industry, there's plenty of incentive to undervalue the shares when they're offered.

In this case, that's not certain. The thrift industry in general has been trading at 80 percent to 100 percent of book value. American National's shares could be worth as little as 65 percent of book if all 900,000 shares are sold, or 77 percent if only 500,000 are sold.

And while American National's capital position is sound, its earnings have been spotty lately. The company also suffers from a big caseload of problem loans -- they shot up to $12.2 million by July 1992, from $1.5 million in 1988. They've since fallen to $10.4 million, but will drag earnings for some time.

Still, demand appears to be high. American National is giving preference to those who were depositors as of July 31, and "It was amazing how many accounts for 100 bucks we got from out of state" in the last half-year, said President and Chief Executive Officer A. Bruce Tucker.

Alex. Brown to cover Baltimore Bancorp

Seems like one good milestone after another for Baltimore Bancorp.

This month the positive news came from Alex. Brown & Sons Inc. It wasn't so much Alex. Brown's investment rating on the Bank of Baltimore parent, which was a "neutral." It was that Brown decided to reinstate coverage of the company, another sign that investors are taking Bancorp seriously.

After a two-year struggle, "the worst seems over, and the company is once again profitable [though modestly so]," concludes analyst John A. Heffern.

Baltimore Bancorp's nonperforming assets are still high, at 11.8 percent of loans and foreclosed real estate, but have been falling at about 14 percent each quarter. At yesterday's close of $12.125, up 12.5 cents, the company now trades at 13.5 times Alex. Brown's 1994 earnings estimate, on the low side because of the problem loans and because the bank still has a thrift's balance sheet.

Still, Chairman Edwin F. Hale Sr. has made no secret of his willingness to sell the company for the right amount, and Mr. Heffern suggests that "speculators may choose to own a bit of the stock in their basket of takeover plays."

Greenville Capital explains its success

Sure, the stock market's overpriced. But the folks at Greenville Capital Management Inc. are convinced they can continue to far outperform the S&P 500. Their approach has made the Delaware company the third best small-stock investment firm in the nation in the last decade, according to Nelson's Investment Manager Database.

Yesterday, Greenville's officers shared that approach with a small gathering at the Center Club, sponsored by Edwin Boyer of Portfolio Consultants Inc. in Baltimore. True to Mr. Boyer's disdain for the "bears" and "bulls" investment metaphors, Greenville's founder Charles S. "Chip" Cruice and associate Locke Wallace are "bird dogs" who apply dogged research and instinct to sniff out individual stocks.

Their baseline criteria are companies with between $100 million and $500 million market capitalization, a minimum 20 percent earnings-per-share growth rate, and a stock trading at no more than 15 times the 12- to 18-month future earnings projection. Naturally, those earnings estimates are crucial, and the company spends most of its time digging into the often obscure prospects it finds.

Their approach has yielded a total annualized return of almost 30 percent in the last 14 years, nearly two times the S&P 500, and 27.8 percent in the last 3.5 years, vs. the S&P's 13.1 percent.

Recent purchases include A. O. Smith Corp., an auto parts maker; Applied Materials, a supplier to the semiconductor industry; La Quinta Motor Inns Inc., the hotel and motel company; and Tellabs, which supplies telephone switching equipment to Fortune 500 companies.

MNC vice president assigned to N.C. post

People in motion:

* One day before the big merger, rumors are flying inside MNC Financial Inc. about who will stay and who will go. One man who already knows his fate is Stephen K. Shock, 41, the executive vice president for treasury operations. Last week, NationsBank Corp. said he will be in charge of the funds management group in Charlotte, N.C. He'll start commuting (temporarily) next week.

* J. Frank Nayden, who resigns this week as the state's associate insurance commissioner for property and casualty, will become of counsel to the Baltimore law firm Shapiro and Olander.

* Provident Bank of Maryland elected a new director to its board: Mark K. Joseph, founder and president of the Shelter Group.

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