Price unit in venture with credit unions
Marriages between banks, thrifts and mutual fund companies are proliferating.
This month, T. Rowe Price Associates Inc. formed the first and largest such marriage with the nation's credit unions. The Baltimore fund manager is forming a joint venture with the Credit Union National Association & Affiliates, the industry's trade group, and the CUNA Mutual Insurance Group, which sells insurance products both to credit unions and their members. Both are based in Madison, Wis.
The offspring of this union, expected early next year, is to be called CMT-T. Rowe Price Managment L.L.C., through which T. Rowe initially will create three proprietary no-load mutual funds -- tax-free municipal bonds, government securities and asset allocation -- which will be marketed by CUNA and CUNA Mutual to any of CUNA's 13,500 credit union members who agree.
So far, the members of more than 500 of CUNA's largest institutions have access to something called Plan America, a financial planning service run by CUNA Mutual, which sells insurance, annuities, load mutual funds and other investment vehicles.
"The Plan America representatives can see 20 people a week in a credit union," said CUNA Mutual's Dorothy Ballantyne. "This direct response distribution method can cover many more members."
How many? There's no telling how many CUNA credit unions will sign up, but if all of them do, T. Rowe will have access to 65 million depositors. That's some dowry.
Two Maryland banks go acquisition route
Two recent deals prove that bank mergers are not the sole domain of the NationsBanks and First Unions of the world.
Tiny Sequioa Federal Savings Bank, a Pikesville-based thrift whose administrative offices are in Bethesda, has agreed to be acquired by Credit International Bancshares Ltd., the Washington-based parent of Federal Capital Bank N.A. Sequioa, with about $50 million in assets, has asked regulators for permission to convert to a national bank charter and then become a subsidiary of CIB, whose Federal Capital unit has about $90 million in assets.
The goal is to give both companies more geographic reach, according to Sequoia Chairman James Tardiff, who assures that despite the deal, "we don't have any intention of getting big."
Sandy Spring National Bank, on the other hand, has managed to get big for a community bank, and next month it'll get a bit bigger. The 125-year-old institution is in the process of acquiring 5-year-old First Montgomery Bank, which has about $35 million in assets and two branches.
Olney-based Sandy Spring, with 11 branches and $650 million in assets, sees the merger as "an opportunity for us to expand our territory into the Rockville-Gaithersburg area," said Willard H. Derrick, chairman and chief executive.
"So many of the older banks that have saturated that area in the past are now headquartered out of state," he said. "We have, by default I guess . . . become the largest headquartered bank in Montgomery County."
Nonperforming loans are spun gold for some
For some, defaulted mortgages and other nonperforming loans are a royal pain. For others, they are spun gold.
JCF Asset Management, a Lanham firm, falls into the latter category. Its JCF Partners this month won the right to acquire a $112 million portfolio of nonperforming commercial mortgages from the Resolution Trust Corp.
The portfolio hardly sounds like a prize, coming as it does from failed thrifts the RTC manages, including Carteret F.S.B. of New Jersey. The mortgage portfolio has been bundled together by the firm, which plans to sell $18 million in bonds, backed by the mortgages. The portfolio is intended to generate enough cash flow as JCF disposes of it to pay back the bondholders and then some. In this case, JCF and the RTC are nearly equal partners in ownership of the mortgage pool.
JCF, a 3-year-old firm, manages more than $1 billion in nonperforming assets for government and private interests.
Joyce Weinstein, a principal and director of asset operations, said the fact that JCF is one of the only female-owned firms in the business may have helped initially. But now, all deals win or lose on the strength of the bid, she says.
This latest RTC deal is JCF's first as an equity partner, rather than merely managing assets for third parties.
"We've done pretty well, I'm not complaining," Ms. Weinstein says. "But obviously the upside potential with equity is interesting. So is the risk, of course."
Loyola Capital called likely takeover target
For those loyalists wondering why Loyola Capital Corp.'s stock spiked up sharply this week, the answer can be found in the latest issue of Barron's.
That's where Reid Nagle, president of Charlottesville, Va.'s SNL Securities, voiced his opinion that Loyola is one of the nation's seven likeliest takeover targets.
Loyola, which was bouncing around $16 a share since early September, jumped up to $18.625 this week after the report was published. Mr. Nagle said Loyola, a below-book-value thrift in the lucrative Baltimore-Washington market, "almost screams out to be purchased."
He also called Loyola an inefficient company, based on its level of expenses. And its lackluster third-quarter earnings, which were reported yesterday, did little to change his mind. The stock price fell to $17.125 yesterday.