The appointment of Alfred Lerner as both chairman and chief executive officer of MNC Financial Inc. may be only temporary until a replacement can be found, according to a stock analyst who follows MNC, the state's largest bank holding company.
It was announced yesterday that Alan P. Hoblitzell, 59, was retiring as chairman and chief executive officer of MNC, effective immediately. Replacing him is Lerner, a Cleveland businessman who is MNC's largest stockholder.
MNC is the parent company of Maryland National Bank, American Security Bank in Washington and Virginia Federal Savings Bank in Richmond.
Kyle Prechtl Legg, a banking analyst for Alex. Brown Inc., a Baltimore investment banking firm, said she has been told by a company official that Lerner is to head the company only on an interim basis while MNC's executive committee and its chairman, Benjamin R. Civiletti, search for a replacement.
However, she said, there is the possibility that Lerner will remain as chairman as he did at Equitable Bancorporation, which MNC acquired in January.
MNC spokesman Daniel Finney confirmed that Lerner "does not envision himself as the permanent chief executive officer." However, Finney would not confirm that the executive committee is searching for a replacement.
"The executive committee will have the responsibility for finding a replacement for Lerner when it is appropriate," Finney said. He said he did not know when it would be appropriate.
Lerner is chairman of the Progressive Corp., an insurance holding company in Cleveland. He could not be reached for comment.
Hoblitzell is to continue to be a director of MNC and to be involved in a wide variety of community activities, Finney said.
Finney said he is not aware of Hoblitzell's taking a position with another company. Hoblitzell was not available for comment.
Finney said Hoblitzell felt that the bank needed a change in the type of leadership. Whereas Hoblitzell's strength was in strategic planning and managing the company's expansion in the 1980s, MNC now needs a "hard-nosed, hands-on, total involvement management approach," Finney said.
Lerner, 56, has a reputation as being a low-key, straightforward type of manager. "He doesn't want any publicity, he wants to make money," said David S. Penn, a banking analyst for Legg Mason Wood Walker Inc., a Baltimore stock brokerage firm.
So far, Lerner has lost money on his investment in MNC. With the stock dropping from approximately $29 a share a year ago to $6.37 1/2 yesterday, Lerner has lost about $170 million on paper in his 8.9 percent share of MNC.
MNC stock was trading at $6 3/4 , up 3/8 , at midday today.
Lerner will increase his stake further under a recent agreement to pump up MNC's capital by buying as much as $180 million worth of cumulative convertible stock. That purchase would boost his ownership of MNC to 23 percent of the shares.
Penn said Hoblitzell's leaving will not have a great effect in the short-run, but it will accelerate the restructuring of the company that was begun last month. "When a new chairman takes over, he likes to clean the decks," he said.
He said it was "a shame" that Hoblitzell was leaving at the low point in the company's fortunes after five straight years of increasing profits. "He happened to be at the wrong place at the wrong time," Penn said.
Even though Lerner has not made a commitment to move to Baltimore, Finney said he "will be spending as much time in Baltimore as necessary. "He will be here 24 hours a day seven days a week if necessary," Finney said.
As part of the acquisition agreement with MNC, Lerner was guaranteed the unlimited use of the company jet until December 1999. He also receives $540,000 a year as a consultant for the company.
The change in leadership comes about a month after MNC launched a restructuring effort that might result in the elimination of jobs.
MNC has one of the mid-Atlantic region's largest commercial real estate loan portfolios and has been hard hit by the worsening real estate market. In the second quarter, the company lost $74.7 million.
The change at the top may mean expanded duties for H. Grant Hathaway, the vice chairman of MNC and the former chairman of Equitable Bank N.A., the banking subsidiary of Equitable Bancorporation.
Finney said Hathaway may be involved in managing the disposition of the company's troubled loan assets, as well as the disposal and recoveries on those loans.