A founding director of an Allentown, Pa., community bank has resigned to protest the bank's acquisition by a larger competitor.
Elmer D. Gates stepped down from Ambassador Bank's board after the bank announced Jan. 26 that it was merging with Fulton Financial Corp. of Lancaster, Pa. Fulton, with $4.5 billion of assets, has promised to preserve Ambassador's name, board, and autonomy, but Mr. Gates said he would be breaking a promise to the community by remaining on the board.
"It says in the covenant that we would maintain it as a community bank," Mr. Gates said. "Selling to a bigger bank violates that covenant."
Eight-year-old Ambassador agreed to be acquired by Fulton for about $77 million in stock-roughly 3.15 times book value. Mr. Gates was the only one of the 10 founding, and still active, directors to oppose the sale.
Mr. Gates acknowledged that the deal for $275 million-asset Ambassador is a good deal for its shareholders. A vice chairman at Fuller Co., a heavy equipment manufacturer, Mr. Gates said he would consider launching a competing community bank in the Lehigh Valley region.
"I'm only 68 years old, I've got a lot of time left," he said.