4 quit Arundel bank's board Ex-director warns shareholders

firm denies allegations

March 04, 1997|By Bill Atkinson | Bill Atkinson,SUN STAFF

Four directors of the Bank of Glen Burnie have resigned, accusing management of moving too slowly to correct problems and not informing them about loans to customers, the former directors said.

Susan Demyan, an attorney and one of the directors who resigned, said the four quit because management was slow to make changes required by the Federal Deposit Insurance Corp. last year. The FDIC order required the bank to improve loan administration and collection, and to adopt a strategic plan.

The former directors also complained that they were being kept in the dark on loans to customers, she said.

"The situation has become intolerable on the board," Demyan said. "They [management] were not doing their job properly. Shareholders should be very concerned about what is going on."

In addition to Demyan, those who resigned from the 11-member board were: Matthew G. Shimoda, a physician and president of Health Care Professionals; Richard Fine, principal of Fine Cos., a construction and development company; and Neil Williams, a retired state trooper.

The flap comes as the bank, with $245 million in assets, posted a $1 million loss for 1996 after losing $1.7 million in 1995.

F. William Kuethe Jr., the Bank of Glen Burnie's president and chief executive, said management expected the loss, and said the bank is on sound footing with nearly $20 million in capital.

Kuethe said the board members clashed over how quickly the bank is progressing after it lent millions of dollars in loans that went bad to a Baltimore trucking firm and its president.

"We feel they [the issues] are moving at a steady pace and becoming resolved," Kuethe said. "But it is not moving as quickly as some people would like."

He said delinquent loans -- loans in which principal and interest payments are late 30 days or more -- are down to 3 percent from a high of 15 percent.

He said the four resigned from the bank Thursday after they were told they could not stand for re-election. They will be replaced at the annual meeting this month.

Kuethe said the four tried to oust him two months ago, but the other seven directors backed him.

Demyan declined to comment on the alleged ouster attempt against the bank president.

She said Kuethe told them they were "causing trouble" by asking questions.

"We were trying to make management accountable," said Demyan, whose first cousin, John E. Demyan, is the Bank of Glen Burnie's chairman, and owner of 8 percent of the company's common stock. "We felt that we did what we were suppose to do."

The Bank of Glen Burnie's losses stem from about $8 million in loans to the trucking company, Oceanic Ltd. Inc., and its former president, Brian H. Davis.

In December 1995, three area banks petitioned a U.S. Bankruptcy Court judge to seize control of Oceanic, claiming Davis and the company had defrauded them of millions of dollars.

Davis was indicted last month in connection with alleged loan schemes involving several banks, including the Bank of Glen Burnie.

This isn't the first upheaval at the Bank of Glen Burnie. Two years ago, Kuethe was embroiled in a proxy fight which led to the ouster of four directors.

Pub Date: 3/04/97

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