As the campaign for control of Baltimore Bancorp enters its final day -- again -- the company's management has won endorsements from two firms that advise institutional stockholders.
Providence Capital Inc. of New York and Institutional Shareholder Services Inc. of Washington urged their clients to vote against turning the bank over to dissident shareholders led by Edwin F. Hale Sr. and to keep current Chairman Robert F. Comstock in charge.
Mr. Hale is backing a proposal to expand the company's board of directors to 28 seats from 18, allowing his backers to gain a majority and control the parent company of the Bank of Baltimore. Voting on the proposal ends today at a meeting at the Sheraton Inner Harbor Hotel.
"We felt that the dissidents didn't have an operating plan" to run the bank if they win, said Jill Lyons, a senior analyst for ISS. "We feel more comfortable with incremental change."
A spokeswoman for Providence said the firm wouldn't comment on its recommendation.
Providence and ISS also advised against expanding the board during an earlier ballot, so the new recommendation doesn't change much. However, Mr. Hale had hoped to turn around one or both of the firms.
Providence Capital advises two of Baltimore Bancorp's biggest shareholders, New York-based Sun America Asset Management Inc. and Legg Mason Inc. of Baltimore. A spokeswoman for Legg Mason, which controls more than 500,000 shares, said yesterday that the company won't disclose how it plans to vote.
Ms. Lyons said that ISS could not discuss who its clients are or how many shares they own, but Daniel H. Burch, a proxy solicitor advising Mr. Hale, said ISS clients' own only about 150,000 shares, fewer than the customers of Smith Barney, Harris Upham & Co.'s Lutherville office alone.
Jerome P. Baroch, Baltimore Bancorp's executive vice president, said that the company hopes the recommendations will help management woo uncommitted shareholders. "They may not see the detailed report, but they see that an outside interest is making a recommendation," Mr. Baroch said.
Both sides said that they had met with both Sun America and Legg Mason directly, which may make Providence's recommendation less important.
Mr. Baroch said that Baltimore Bancorp management won't predict whether it will win the vote, but both sides feel reasonably confident.
"We feel very good at this point," said Mr. Burch. "The support has been better in many respects than last time. The victory we had last time gives us a lot of credibility that we had to earn."
The "last time" was an election in May, in which Mr. Hale's group won six seats on the board of directors. But a federal judge ordered a new vote on expanding the board, voiding Mr. Hale's apparent 970,000-vote victory, because about 1 million of the 10 million ballots were so vaguely worded that the judge said it was impossible to tell how the owners of the shares intended to vote.