Maryland by Industry - Finance and Banking

Daily Record, The (Baltimore), Dec 11, 2004 by Shelly Schwartz

The financial services sector may be playing catch-up following the latest bout of investor uncertainty, but its contribution to the state's economy remains well in hand.

The industry, which includes security and commodity brokerage firms, insurance companies, credit agencies and community banks, is the second-largest in Maryland. It single-handedly provides $42 billion, or 21 percent, of the gross state product, not to mention some 151,000 jobs statewide.

At present, about 7,000 finance and insurance establishments operate in the state.

Employment in the industry grew 3 percent last year from 2002, according to the Maryland Department of Labor, Licensing and Regulation.

With low labor costs and proximity to the nation's capital, it's easy to see why Maryland has attracted some of the world's leading firms.

Baltimore itself is headquarters to the nation's oldest brokerage firm, Deutsche Bank Alex. Brown, along with investment advisors Legg Mason and T. Rowe Price. Insurance giants AEGON USA and GEICO also operate within the state.

Other companies, including Allstate Insurance, Cedar Group, Morgan Stanley, NCO Group and Toyota Financial Services are among the most recent companies to expand or locate operations within the state, according to the Maryland Department of Business and Economic Development.

Deutsche Bank Alex. Brown has had a presence in Maryland for over 200 years, said company head Corky Crozier. We have offices in 14 cities, and Baltimore remains an important part of our national private client services business.

Maryland's community banks, of course, are also an important piece of the financial services puzzle.

By market share, Bank of America has the largest presence in the state, claiming 17 percent with its 191 branches. M&T Bank claims 10 percent of market share with 162 offices, and Chevy Chase Bank, headquartered in Bethesda, comes in third with 8 percent of the market and 114 offices, according to the Maryland Bankers Association.

As of June 2004, 147 FDIC-insured banking institutions were located in Maryland with deposits totaling $82 billion, according to the Federal Deposit Insurance Corp. The largest number of those, 88, operate within the Baltimore metro region, with deposits of $40 billion.

Profitability [for bankers] has been very strong, said Kathleen Murphy, MBA president and chief executive. Banks are going to reflect their communities, and because of the strengthening economy, you see banking being very strong in loan growth.

Much of that growth is driven by mortgage loans as the housing boom continues. But an up-tick in small-business lending is close behind, Murphy predicts.

Last year, she notes, three new banks opened in the state - Howard Bank, Congressional Bank, and Fidelity & Trust Mortgage. A fourth, HarVest Bank opened last month.

Commerce Bank of Mount Laurel, N.J., also has plans to open 200 branches in Maryland, Washington and Virginia during the next six years.

Indeed, Maryland's demographic mix and affluent population lends some appeal to those in the financial services industries.

Its mid-Atlantic location in the eastern time zone provides easy access to international and domestic financial hubs, including Boston, Charlotte, Chicago, Frankfurt, Geneva, London, New York City, Philadelphia, San Francisco and Toronto.

Proximity to the nation's capital also is key, where many of the major regulatory institutions governing the industry are based, according to DBED. Those institutions include the Federal Reserve, the Securities and Exchange Commission, the U.S. Treasury Department and the Federal Deposit Insurance Corp.

Maryland also boasts one of the East Coast's most cost-effective environments in which to establish a financial services business, giving employers more bang for their buck.

The 2003 median hourly wage for financial analysts in Baltimore, for example, comes in at $24.73 an hour, according to data from the U.S. Bureau of Labor Statistics. That compares with $31.42 an hour in Boston, $36.91 in New York City and $26.01 in Philadelphia.