In a sudden shift of power at the state's largest banking company, Alan P. Hoblitzell Jr. resigned yesterday as chairman and chief executive of MNC Financial Inc.
Alfred Lerner, a Cleveland investor who became MNC's largest shareholder after its merger with Equitable Bancorporation this year, was named as Mr. Hoblitzell's replacement.
Mr. Hoblitzell, 59, will remain a director of the company, while Benjamin R. Civiletti, an MNC director and Baltimore attorney, was elected to replace him as chairman of the board's executive committee, the company said.
The subject of widespread speculation for months, the early retirement of Mr. Hoblitzell, a 34-year veteran at the bank, only mildly surprised most analysts and observers.
"The financial landscape has changed," said David S. Penn, a banking analyst at Legg Mason Inc. "What Hoblitzell has done best -- grow the bank and position it for acquisitions and interstate banking -- that's not what's needed right now."
Given the array of difficulties that confront MNC, from a slew of troubled loans and losses to an ongoing absorption of Equitable and a corporate-wide reorganization, many analysts had believed that Mr. Hoblitzell's days might be numbered.
But few observers expected Mr. Hoblitzell's resignation from the $27.5 billion banking company and the ceding of power to Mr. Lerner to come as quickly as it did.
"Yes, it surprised me," said Mr. Lerner, 56, from MNC headquarters in Baltimore yesterday. "And it disappointed me. He is a good guy, he's a good banker, a good manager and a good executive. I wanted him to stay on, but he made a choice and I respect that."
Mr. Lerner, who was chairman and the largest shareholder of Equitable, has served as a director of the regional banking giant since the merger of Equitable into MNC in January.
Rumors surrounding Mr. Lerner's possible ascension into the posts held by Mr. Hoblitzell heated up within recent months as Mr. Lerner agreed to provide $180 million in capital to the banking company, with up to 50 percent of the financing coming from other directors.
At the completion of the deal, expected in November, Mr. Lerner's stake could increase to about 24 percent of MNC's 84.8 million shares outstanding.
Mr. Lerner, however, said that his tenure as chief executive might be short-lived.
"I do not expect to be CEO indefinitely," he said. "When we do find the replacement, that will be a very smooth transition. But we're not operating on an interim basis right now. We're operating to fix this business and make this business what it is supposed to be."
The change at MNC, which owns Maryland National Bank and American Security Bank in Washington, comes at a pivotal time.
After orchestrating MNC's phenomenal growth during the 1980s, including its merger with American Security in 1987 and Equitable this year, Mr. Hoblitzell found that a rapid expansion into commercial real estate lending backfired this year.
The company announced it lost $74.7 million for the quarter ended June 30 after piling up hundreds of millions of dollars in troubled loans earlier this year.
Trading as high as $29.25 a year ago, MNC plummeted below $6 a share earlier this month. Traded on the New York Stock Exchange, MNC closed yesterday at $6.375 a share, down 25 cents.
At the same time, MNC has been struggling to absorb Equitable, formerly the state's third-largest bank.
So far, at least five Maryland National Bank executive vice presidents have resigned while as many as a dozen senior vice presidents are expected to depart in coming weeks.
According to a number of high-level sources at the company, Mr. Hoblitzell found the shift from building MNC to resurrecting it not an area of his strength or interest.
"He built this company up to where it is today," said one senior vice president who spoke on the condition of anonymity. "To try and go and restructure the company meant he would have to go back and question all the decisions he made. You need a more objective person in there. When you make a decision, it's hard to go back later and punch holes in it."
MNC director Francis P. Lucier, former chairman of The Black and Decker Corp. and current chairman of Hartland & Co., a pension consulting firm, said Mr. Hoblitzell and asked him to call a special board meeting Saturday morning.
He said Mr. Hoblitzell told him that his "management style really fit what we were doing in the '80s.
"Believe me, there's a better management style that's needed. I am just hurting the institution if I go any longer," Mr. Lucier quoted Mr. Hoblitzell as saying. Mr. Hoblitzell also suggested that Mr. Lerner replace him as chairman and CEO, an MNC spokesman said.
At Saturday's meeting, all but one director participated at the meeting either in person or by telephone, according to an MNC source. After speaking five minutes on his reasons for resigning, Mr. Hoblitzell left.
About three hours later, with five of the company's 28 directors abstaining -- including Mr. Lerner -- the board elected Mr. Lerner.
Change at the top
Sept. 4, 1956 -- Alan P. Hoblitzell Jr. joins Maryland National Bank as a management trainee.
Sept. 11, 1964 -- Mr. Hoblitzell named bank's vice president.
April 11, 1969 -- Mr. Hoblitzell elevated to senior vice president i charge of commercial lending.
Sept. 1, 1976 -- Mr. Hoblitzell is promoted to bank's presiden and director.
Feb. 9, 1979 -- Mr. Hoblitzell is named bank's CEO.
May 8, 1981 -- As part of an agreement settling a lawsuit Equitable and Alfred Lerner make a deal that allows the Cleveland investor to purchase 27 percent of the bank's stock. The bank also drops lawsuit against Mr. Lerner's partnership.
March 25, 1983 -- Mr. Hoblitzell becomes CEO of the holdin company, Maryland National Corp.
Dec. 14, 1984 -- Mr. Hoblitzell is elected chairman of the holdin company.
March 16, 1987 -- MNC completes merger with America Security Corp. of Washington, D.C.
April 29, 1987 -- Maryland National Corp. changes name to MN Financial Inc.
Aug. 5, 1987 -- Lerner-controlled partnership wins clearanc granted by federal banking regulators to purchase 24.9 percent of Cleveland-based Ameritrust Corp., one of the city's largest banks.
April 11, 1988 -- Mr. Lerner invests $75 million in Progressive Corp., a Cleveland-area insurance company.
Oct. 17, 1988 -- Mr. Lerner, with a reported net worth of $23 million, snags a first-time spot on the Forbes 400, a list of the wealthiest Americans.
July 11, 1989 -- Equitable and MNC agree to merge, positionin Mr. Lerner for a 8.9 percent stake in the resulting company.
Jan. 18, 1990 -- MNC's acquisition of Equitable is completed.
Jan. 22, 1990 -- Mr. Lerner sells his nearly 20 percent stake i Realty ReFund Trust and retires as chairman and CEO of the Cleveland-based company.
July 24, 1990 -- MNC reports a $75 million second quarter loss.
Aug. 6, 1990 -- Mr. Lerner's $180 million cash infusion i exchange for a possible 23 percent total stake in MNC is announced.
Sept. 11, 1990 -- MNC maintains quarterly 29-cent stoc dividend, despite skepticism.
Sept. 24, 1990 -- Mr. Hoblitzell retires as chairman and CEO o MNC, and Mr. Lerner assumes both roles.