Another volley was fired in the campaign for control of Baltimore Bancorp yesterday as the company pledged it is responding to the shareholder dissatisfaction that turned out six incumbent board members in May and offered the outline of a plan to boost the company's profits.
The announcements were part of a proxy statement released today and mailed to shareholders over the weekend.
Management has been fighting a proxy contest with dissident shareholders led by Baltimore Blast owner Edwin F. Hale Sr. since April. In May, a slate of six directors backed by Mr. Hale won seats on the company's 18-member board.
But in June, a federal judge ordered a new election on a proposal to expand the company's board to 28 members, which would give the Hale group control of Baltimore Bancorp, the Bank of Baltimore's parent company. U.S. District Judge J. Frederick Motz ordered the new election because he found that vague language on some of the ballots left it unclear how people intended to vote on expanding the board.
The voting in the new election will be open until Aug. 29. Baltimore Bancorp stockholders will be getting proxy statements and ballots from each side and might also get follow-up letters and phone calls before the vote.
"I've heard their [shareholders'] message," said Robert F. Comstock, who replaced Harry L. Robinson as the company's chairman and chief executive officer in late June. "We've established an open line of communication with our shareholders, and we intend to continue that."
Mr. Robinson was criticized for allegedly not taking shareholders' opinions seriously and for company profits that the Hale group has said lag those of competing banks. Management's new proxy statement acknowledges that shareholders have been slighted and returns weak, but it says that Mr. Comstock has begun to change that.
The company has formed a committee to explore selling the bank. Much of the stockholder unhappiness developed after the board rejected a takeover overture from First Maryland Bancorp last year.
Baltimore Bancorp revised its operating strategy within two weeks of when Mr. Comstock assumed his new job, which the proxy says pays $250,000 a year (down from $368,076 for Mr. Robinson in 1990).
The new plan calls for the bank to slow down its growth. The company grew quickly during the late 1980s and partly funded the expansion with brokered deposits, which forced the bank to pay high interest rates for certificates of deposit. That cut into profits.
Mr. Comstock said that the company is pledging to push into corporate lending, a field in which it has been a minor player. Making commercial loans will help the bank attract low-interest corporate checking account deposits from its corporate borrowers, which will boost profits, Mr. Comstock said. The bank also wants to increase its fee income, the money it makes from service charges.
Hale group members have complained that the plan was announced before the newly elected board members were told about it.
"To develop a totally new operating plan for a bank in two weeks is hot air," said Daniel H. Burch, a New York proxy solicitor advising Mr. Hale. "They've me-too'd our program. They fired one guy, and suddenly the rest of them can solve the problem under the leadership of a guy who was on the executive committee under Harry Robinson."
Mr. Burch said that the operating plan didn't have any specific information about how the company will meet its new goals.
The Hale group is scheduled to send out its new proxy statement today.