Hey, Harry, take a graceful exit from the bank

PHILIP MOELLER

June 12, 1991|By PHILIP MOELLER | PHILIP MOELLER,SUN BUSINESS EDITOR

Harry, Harry, Harry. It's time to go, to give it up, to take whatever parachute you've got and bail out of Baltimore Bancorp.

Your shareholders, or at least nearly 60 percent of the ones who cast votes at your recent annual meeting, already favor early sunsets for half a dozen of your board directors -- Charles T. Albert, L. Patrick Deering, George B. Hess Jr., W. Clark McClellan, Theo C. Rodgers and Rodney G. Stieff.

In hindsight, they may be the lucky ones.

Now, it's time for a graceful exit by the guy at the top, Harry L. Robinson.

That's you, Harry. And leaving does nothing to tarnish your fine career at the Bank of Baltimore, your leadership role in converting it from a savings and loan to a viable commercial banking company and your obvious tenacity and dedication in maintaining Baltimore Bancorp as an independent, locally owned and managed business.

Graceful, however, is not a word that's been used in describing your behavior so far. (Nor, I might add, has it ever been needed in discussions of your opponent for control of your banking company, shipping-company owner Edward F. Hale Sr.).

This has been an ugly contest in a town not used to boardroom squabbles, let alone the kind of open warfare you guys have waged. Add in the fact that we're talking about a nice, staid banking company, and the picture becomes curiouser and curiouser.

After an amusing spring season of your defensive antics, however, your shareholders have expressed themselves clearly. Despite tactics on your part that have invited criticism from the U.S. Securities and Exchange Commission, you have managed to lose an open shareholders' vote.

That's almost unheard of in American business. For a home-based banking company in a conservative town like Baltimore, it's nothing short of a trip, escorted by the tar-and-feathers committee, to the city limits.

Charting how things reached this state is not hard.

You received a cash buyout offer of $17 a share in April of 1990 from First Maryland Bancorp, which had been controlled since 1983 by Allied Irish Banks. Allied Irish bought all of First Maryland in 1989 and came looking for more last year.

At first, your refusal to consider a sale was viewed as simply sound business. Lots of merger targets have gotten higher bids by rebuffing initial offers. Given that your stock was trading for $10.25 the day the offer was made, you can understand why at least some shareholders were interested in locking in profits of at least $6.75 a share.

First Maryland, however, did not sweeten the pot. When you continued to reject its offer, your halo started slipping, and you began coming across to some shareholders as having far more interest in your professional survival than in the value of their investment in Baltimore Bancorp.

You argued that current management in an independent banking company could reap greater rewards for shareholders than selling the company. Fair enough.

But as a declining economy began to reveal the extent of banks' exposure to huge real estate loan losses, your recalcitrance to even consider a merger became less and less understandable or acceptable. With First Maryland's offer of $17 a share still sitting on the table, the falling price of your own stock made shareholders uneasy at first and, later, angry.

Last fall, when First Maryland formally withdrew its offer, your shares were trading for only $5.75 each. That kind of gap was bound to keep shareholders angry -- angry enough to overwhelm the natural tendency of people here to favor the hometown guys over a foreign-owned bank.

Ed Hale, who can come across as dumb as a brick wall (until your guard is down and he can cream you), smelled wounded prey and began moving in.

You made it easy for him, and by the time your bank woke up to its true plight, the battle may already have been lost.

Now, it most surely is.

On paper, Mr. Hale will control six of Baltimore Bancorp's 18 board seats. There's also the matter of whether Mr. Hale's

additional slate of 10 directors (which would give him outright control of 16 seats on an expanded 28-member board) requires a simple, 50 percent majority vote or an 80 percent vote, which is what your contested bylaws say. A ruling on that matter is expected next week.

In reality, you can't run Baltimore Bancorp with a divided board, whether the split involves 18 or 28 board members. More to the point, you have more than 1,000 employees whose livelihoods would be adversely affected by a split board.

Now, you can blame Ed Hale for this. But Ed Hale didn't cast the 6 million shareholder votes against your slate of board nominees. Lots of shareholders did. And you ought to listen to what they're saying.

The local ownership issue doesn't play well, anyway. Baltimore's banking community has been increasingly dominated for five years by outside ownership, without paying substantially less attention to local borrowers than the home teams such as yours, Harry.

Community investment rules, which are receiving greater attention these days, can be used effectively to restrain any inappropriate flight of capital to Ireland or any other headquarters town of a banking company.

The issue of corporate involvement in civic and philanthropic activities has more staying power, but your outfit is hardly Maryland National Bank. Besides, most smart money thinks the consolidation wave now hitting the banking industry will sweep over smaller banks like yours and leave us with an eclectic mix of behemoths and boutiques. The Bank of Baltimore is neither.

It's time to say good-bye, Harry. Do it under your own power, not Ed Hale's.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.