At one point during the three years that Harbor Bank of Maryland operated under heightened federal scrutiny, a regulator asked CEO Joseph Haskins Jr. why he stuck it out. Why not just retire?
But for Haskins, one of the founders of the Baltimore bank in 1982, walking away was not an option.
"I've grown up not running from a challenge, but facing it head on and looking to find a solution," said Haskins, 65. "And so, it isn't in my DNA to wilt under pressure. In fact, it only strengthens my resolve."
Harbor Bank, a minority-owned commercial bank with nearly $251 million in assets, is one of the many institutions that ran into trouble following the financial crisis in 2008. The bank lost money on troubled real estate loans and entered into a consent order in 2010 with federal and state regulators, agreeing to make changes to shore up its finances. Earlier this year, federal regulators lifted that order. Though Harbor still faces challenges — it recently posted a quarterly loss — bank officials say the lender has emerged stronger.
The bank's directors, a who's who of Baltimore business leaders, credit Haskins for calmly steering the bank through the crisis.
"He kept a cool head," said Edward St. John, a bank director and president and CEO of St. John Properties, a Baltimore development company. "I know I couldn't have."
Haskins grew up in Northeast Baltimore, the son of a longshoreman and homemaker. After graduating from Morgan State University in 1971 with a bachelor's degree in economics, he was recruited by Chemical Bank in New York for its management training program and became a loan officer. After a few years, he joined a New Jersey bank. He also earned an MBA in finance at New York University in 1975.
Haskins always planned to return to Baltimore and did so in the mid-1970s at the urging of a friend who said the move would help his career and hometown. Haskins interviewed with large banks in Baltimore but wound up taking a position as vice president of business and finance at what was then Coppin State College. Haskins later earned a master's degree in economics at the Johns Hopkins University in 1979.
Around that time, academics and community activists who wanted to create a bank to serve Baltimore neighborhoods ignored by larger institutions asked Haskins to join the effort, he said. Haskins argued that the bank would need a cadre of successful business people behind it to flourish.
Organizers recruited business leaders, some of whom remain on the board. They include Erich March, vice president of March Funeral Homes; John Paterakis, CEO of H&S Bakery and a developer in Harbor East; and Louis Grasmick, CEO of Louis J. Grasmick Lumber Co. Inc.
Haskins, one of those first directors, left Coppin in 1981 to become an investment broker for a few years, before the bank chose him as CEO in 1987. He later took the helm of its holding company, Harbor Bankshares, created in 1992.
With seven branches, Harbor lends to developers, small businesses, faith-based groups and homebuyers. Closely held, its stock trades infrequently over the counter.
Haskins said he became aware of trouble brewing in the housing market around late 2005. Brokers were submitting applications for subprime mortgages with errors and misinformation, prompting Harbor to cut them off, he said. Blamed for precipitating the housing crash, subprime loans are for less-credit-worthy borrowers.
The bank also increased the amount of equity it required developers to invest in commercial projects, Haskins said.
The financial crisis of fall 2008 upended the housing market and banking.
"All of a sudden, housing just stopped dead in its tracks, and then we had this free-fall in housing values," Haskins said. "During that period, the feeling was that commercial real estate was going to be the next shoe to drop."
Regulators, criticized for missing the subprime crisis, quickly raised lending standards, Haskins said.
Harbor didn't sustain a loss from subprime mortgages, Haskins said. But other loans deemed satisfactory under the old rules were now classified as troubled, even in some cases where borrowers had not missed payments.
Harbor wrote off troubled loans and boosted its reserves for potential losses but, after years of profitability, posted a $1.38 million loss in the fourth quarter of 2008.
For Haskins, that was the most difficult time. "I had never had a loss," he said. "It was like getting hit with a left hook."