Ferris, Baker Watts celebrates 100 years

February 27, 2000|By Bill Atkinson | Bill Atkinson,SUN STAFF

Ferris, Baker Watts Inc. has never had a problem taking the path less traveled.

When other brokerage houses rushed to offer clients trading over the Internet, Ferris Baker Watts passed, opting to work with clients face to face.

When firms closed their municipal bond underwriting businesses, Ferris Baker Watts kept its open, though business has been cutthroat.

And as competitors began selling out to giant banks at high premiums, company officials didn't think twice, even though some employees could have cashed in big.

The firm may not be the biggest or flashiest brokerage house in the industry, but on Wednesday, it celebrates its 100th year in business -- a testament not only to management's ability, but to its will to survive even in the toughest times.

While the firm's style might seem a bit old-fashioned by today's standards, Ferris Baker Watts' managers make no apologies.

"We are not a firm made up of Albert Einsteins or Albert Schweitzers," said Louis J. Akers Jr., chief executive officer of the firm, which has headquarters in Baltimore and Washington. "We are just really trying to do a good job for our clients. Maybe that is not Wall Street, but that is Ferris Baker Watts."

Whether the firm will thrive another 100 years, let alone 10, is anybody's guess because regional brokerage firms face an onslaught of challenges.

Brokerages that have teamed with banks can deliver an array of financial products under a single umbrella, ranging from car loans to mutual funds to brokerage to investment banking services.

Large firms, such as Merrill Lynch & Co., Goldman Sachs Group Inc. and Morgan Stanley Dean Witter, have armies of brokers, strong name recognition, and can muscle into markets with well-financed advertising blitzes.

The top five brokerage firms account for 50 percent of all commission revenue, and the top 10 firms reap 70 percent of all underwriting business, said Amy S. Butte, an analyst at New York-based Bear Stearns & Co.

"I think it is tough because you really need economies of scale or some sort of specialty," said Anna Dopkin, a financial services analyst at T. Rowe Price Associates Inc. "In this business you need something special to attract customers to your shop, whether it be a star money manager or the ability to get your hands on some hot new issue."

Despite the challenges, business has never been better for the firm, which is privately held. Customers are streaming through its doors, and profit is at an all-time high, executives said.

Gross revenue jumped 25 percent to a record $149 million in its fiscal year that ended Feb. 25, more than double what it was five years ago. Capital has swelled to $95 million, up 15 percent from the previous year. And the number of employees has risen to 600, up from 573 at the end of last year.

"I think we have tremendous momentum," Akers said. "I think our future is going to be better than the past. I'd like to think that the next 10 years will be great growth years."

Even competitors are impressed with the firm's performance and longevity.

"In order to be in business 100 years, you not only have to be good, you have to be lucky," said James W. Brinkley, president of Legg Mason Wood Walker Inc., the brokerage arm of Baltimore-based Legg Mason Inc. "A lot of things could come along and flip you over. They are nice people, they provide good service and they have a good reputation."

To continue prospering, Ferris Baker Watts must develop its modest investment banking business, executives said. The company relies heavily on revenue generated by its brokers, municipal bond department and trading desk.

By taking more companies public, advising on more mergers and acquisitions and by offering financial advice to corporations, Ferris Baker Watts can generate additional income, and show prospective clients that it has a broad base of products and services.

"My objective over the next eight years is to make Ferris Baker as well known as an -- investment banking firm as it is a -- regional retail firm," said the company's chairman, George M. Ferris Jr., 72, who is spearheading the effort.

He believes that the firm can generate plenty of deals in its back yard -- Maryland and Northern Virginia, which are hotbeds for fast-growing Internet and technology companies.

It is also an area where the Ferris Baker Watts name is well known, especially by small, high-tech companies. George Ferris expects the firm to have few problems attracting clients because big competitors want big deals, while he is content scooping up smaller ones.

"We think that is a niche where there is not that much competition for those companies," he said.

But building the business won't be easy, said Kristofer Williams, a senior analyst at CommScan LLC, a New York-based investment banking research firm.

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