Momentum is building for a dissident shareholders group in the battle for control of Abigail Adams National Bancorp, Washington, D.C.
The bank's chairwoman, Barbara Davis Blum, and five other directors said Tuesday that they would not challenge the dissidents' bid to unseat them. The statement was made in a letter to shareholders that was filed with the Securities and Exchange Commission
Ms. Blum, the bank's chief executive officer since 1983, said it would be too costly to wage war against the dissidents, even though she would lose the CEO job if defeated.
"If you, the shareholders, possessed of all the facts, decide to hand over the company to Mr. Reynolds, that is a decision by which we must and will abide," the letter states.
Board member Marshall T. Reynolds, the lead dissident, is circulating a proxy urging stockholders to replace four directors with a slate he has nominated. Mr. Reynolds has been squabbling with the rest of the board since the $128 million-asset bank's aborted acquisition of Arlington, Va.- based Ballston Bancorp.
Abigail Adams' annual meeting has not yet been scheduled. If the dissidents can get 50% of the bank's ownership to consent, they could force a director switch without a meeting.
A spokesman for the bank said it would not discuss the letter. Mr. Reynolds referred questions to his attorney, who did not return phone calls.
Abigail Adams agreed to buy $80 million-asset Ballston last June for $14 million, in a deal Mr. Reynolds endorsed at the time.
But he changed his mind in October and led a successful campaign to defeat the proposed merger in a general shareholder vote.
After the merger's defeat Abigail Adams sued Mr. Reynolds, asking for damages for thwarting the transaction. Mr. Reynolds began the proxy campaign after the lawsuit was filed.
The directors estimate the bank has spent $1.2 million fighting Mr. Reynolds. Instead of spending more, they have decided to trust the judgment of shareholders.
"We believe that the direction that Mr. Reynolds wishes to take this company is not in the long-term interest of its shareholders, its customers, or the community," the letter states. "The decision is in your hands."
