layered on what otherwise was a banner 2018.
Still, on the whole it was a very solid year locally for the industry. (Changes in the federal tax laws were a great boon for most large and regional banks’ bottom lines everywhere.) Here are some of the major stories.
Howard Bancorp.’s acquisition of First Mariner Bancorp., and the subsequent relocation of its headquarters to Baltimore, made it the largest community bank in the region. The acquisition capped a series of mergers in recent years that elevated Howard from a sleepy institution to a major player.
It wasn’t the only dealmaker in action:
- Old Line Bank, which opened in 1989 in Waldorf, announced its acquisition of Columbia-based Bay Bank.
- Hamilton Bank, a Baltimore-area community bank that had been around since 1915, was acquired by Orrstown Financial Services Inc., based in Shippensburg, Pennsylvania.
Welcome to town
For years JP Morgan Chase & Co. has been one of the nation’s largest banks, yet its presence in Maryland has been, well, virtually nonexistent – no branches, no ATMS.
In April Chase announced a significant expansion into the Washington market, including Maryland. The bank said its expansion would include up to 70 new branches, 700 new employees, a commitment of $4 billion for home and small business lending and $15 million in philanthropic efforts.
Money managers do well
For much of the year, Baltimore-based money managers T. Rowe Price Group and Legg Mason Global Asset Management reported steady gains in assets under management and returns to investors.
T. Rowe, which launched a new marketing campaign to tout its strategic investing approach, in October reported that it had grown assets under management 14 percent to $1.08 trillion, up from $948 billion at the same point last year. The firm reported a net income of $583 million with $2.30 of diluted earnings per common share, again, both healthy increases from the third quarter of 2017.
The numbers from Legg Mason, which has expanded its product lines through the years, weren’t quite as strong but were positive nonetheless. While assets under management in the most recent quarterly report were $755.4 billion – almost exactly what they had been a year ago – the company’s diluted earnings per share went from .78 a share to 1.57.
Leaders of both companies say the current Wall Street volatility should not undermine what are basically strong economic fundamentals. Whether investors agree with them in 2019 remains to be seen.
M&T’s gleaming new home
It rose up from Light Street, the first downtown office building high-rise in Baltimore in decades. One Light Street’s 28 stories also will boast hundreds of residential units – and several floors are leased by its main business tenant, M&T Bank.
M&T, which is headquartered in Buffalo, New York, said the building was an appropriate metaphor for its commitment to Baltimore and to the region.
M&T continued its dominance of the local Small Business Administration loan market, handling 49 percent of the total loans during fiscal 2018 in the SBA’s Baltimore district, which covers all of Maryland except for Montgomery and Prince George’s counties.
Fintech and cautionary tales
Banks have made huge investments to become more digitally savvy and to fight off competition from nontraditional fintech players.
But the laws of gravity and economics apply to the disruptors as well as to traditional institutions. Baltimore fintech startup Blispay shut down lending in late November, offering few explanations for why it was headed to the sidelines during the busiest shopping season of the year other than to say the move would “give us time to catch up with our growth.”
Blispay’s business model was to pair up merchants and consumers, who could use a Visa credit card to finance purchases of more than $199 interest-free for six months, just as they would with a store-specific card.
And the ultimate disruptors, cryptocurrencies, came down from their stratospheric heights. Investors who had seen the price of a Bitcoin hit $19,783 last December, now are holding something (figuratively, of course) that is now only worth $3,810, The New York Times reported Thursday.
Not just for checking
In the who-would-have-thunk-it category, a combination of higher interest rates and the precariousness of the bond and stock markets meant that consumers actually were looking to bank deposits as a safe haven.
For the first time in years, banks were offering 2-3 percent interest rates on some deposit products.
As Daily Record business writer Tim Curtis detailed, banks have begun competing with each other – as soon as one bank offers a competitive rate, the bank next door is moving to top it.
“You post a rate today and then six other banks post a rate tomorrow that beats your rate slightly,” David Seyler, senior vice president at Old Line Bank, said. “It goes back and forth. It’s like a ping pong ball.”