Baltimore Bancorp pushed for the recent resignations of three outside directors who had sought a review of the bank's new management by independent directors, according to letters of resignation submitted by the directors and filed yesterday with the Securities and Exchange Commission.
The angry departures last week, which followed the resignation of another director and the withdrawal or firing of the bank's law firm, marked a break in the cobbled-together coalition that ousted former Chairman and Chief Executive Harry L. Robinson in a proxy fight last year.
Washington investment banking consultant Charles J. Kelly Jr., mortgage banker J. Richard Leon of Potomac and David D. Smith, president of Sinclair Broadcast Group, which owns WBFF-TV in Baltimore, quit the board April 6 after disagreements with Baltimore Bancorp Chairman Edwin F. Hale Sr., according to copies of their resignation letters submitted to the SEC.
Their letters said a majority of the board had asked for their resignations.
Another director, Richard Fasold, resigned before the three men, but their letters said he and former bank counsel Dennis Gingold also were upset with management. A fifth director, Dr. David Hungerford, an orthopedist, resigned due to scheduling conflicts, Mr. Hale has said.
"We have been ignored or outvoted on critical matters, and Chairman Hale has asserted that the board is 'loyal' to him," Mr. Kelly wrote. He declined to speak with a reporter yesterday, as did Mr. Fasold and Mr. Leon.
"I have been asked, or told I guess, that I shouldn't discuss these matters with the press, and that I should refer these questions back to the company," Mr. Leon said.
The three letters say the directors were forced out after they tried to form a committee to review management, led by Mr. Hale and company Chief Executive Charles H. Whittum Jr. Mr. Kelly said in his letter that the move followed "severely critical comments" from the Federal Deposit Insurance Corp. "regarding management deficiencies and inadequacy of board oversight." Officials of the bank could not be reached for comment.
The FDIC's review of the bank led Baltimore Bancorp, the parent of the Bank of Baltimore, to add $25 million to its reserve to protect against bad loans. The company had reported a loss of $101 million last year, as the new management aggressively wrote down loans that were made before it took over in September.
The bank returned to profitability in the first quarter, however, earning $5.1 million, or 40 cents a share.
The resignation letters said Baltimore Bancorp attorney Charles Allen tried to limit the powers of the proposed review committee, which delayed its first meeting to March 23 from March 18. On March 20, Mr. Hale canceled the meeting, the letters said.
The split over the independent directors' review committee reflected a split in the company's new management that was apparent even last year.
Mr. Kelly, Mr. Leon and Mr. Fasold had never worked with Mr. Hale before the proxy fight. They joined Mr. Hale's slate of director candidates at the recommendation of Mr. Gingold, who represented them in other ventures.
Mr. Hale and Mr. Gingold joined forces because clients of Mr. Gingold had been considering trying to unseat Baltimore Bancorp's management even before other insurgent stockholders enlisted Mr. Hale.
Mr. Hale frequently pointed to several of the now-departed directors as examples of the banking and financial expertise his slate would bring to the company. Mr. Smith, Mr. Kelly and Mr. Leon all sat on the new Baltimore Bancorp board's executive committee.