Dissident shareholders of Baltimore Bancorp resumed their struggle to gain control of the company yesterday by mailing a proxy statement and ballot to shareholders who must vote on whether to expand the company's board of directors.
Expanding the board from 18 to 28 members would hand control of the company to dissidents led by Edwin F. Hale Sr., owner of a shippingcompany and the Baltimore Blast soccer team.
Shareholders will vote by Aug. 29 on a proposal to amend the company's bylaws to allow the expansion of the board, and also on a separate question asking whether shareholders want to use that authority and expand the board if the first resolution passes.
The vote is the second phase of a proxy battle that began in April and has led to the resignation of former Chairman and Chief Executive Officer Harry L. Robinson, who left the company after he wasn't re-elected as chairman.
Mr. Hale's slate whipped management-backed incumbents for the six available seats on the company's board in May, but U.S. District Judge J. Frederick Motz ordered a new vote on expanding the board. Judge Motz said that it wasn't clear how owners of more than 1 million of the company's 12.8 million shares wanted tovote on the expansion issue. Because there was no dispute over votes on other questions, the election of the six Hale-backed directors wasn't affected.
The Hale proxy dismisses management claims that Robert F. Comstock, Mr. Robinson's replacement, has started solving the problems that sparked the proxy fight.
"Mr. Comstock's statements appear to be designed to give stockholders the false impression that management is working together to accomplish the improved earnings results the stockholders so clearly indicated -- by electing six new directors -- that they want," the proxy said. "That is simply not the case."
The proxy repeats a criticism the Hale camp has made before: that the new management's operating plan was put together in haste and hasn't been debated by the company's split board. And it criticizes the incumbents for giving Mr. Robinson a $1.8 million "golden parachute" to pay off a contract that ran until February 1994. "The shareholders paid for his country club membership and his car allowance through Feb. 1, 1994," the proxy said.
Mr. Comstock said Monday that the company is abandoning its strategy of rapid growth, which had been partly responsible for the company's heavy reliance on high-interest deposits such as brokered certificates of deposit.
Instead, Baltimore Bancorp will concentrate on making the existing $3.5 billion company more profitable, partly by serving more corporate customers. Corporate checking accounts are among the best kinds of business for a bank because they demand little or no interest for deposits, while the bank can lend money to the corporations at market rates.
The company has also said that it will try to get more of its revenue from service charges, such as credit-card fees and mortgage-origination charges. That will cut its dependence on interest income, which is more volatile and risky than service charges.
In a statement late yesterday, the bank said that expanding the board would be expensive and contended that the Hale slate's nominees lack banking experience.