Long before Maryland officials announced an agreement this week to sell the financially weakened Community Savings & Loan to Mellon Bank Corp., it had become quite obvious that the state's banking industry was undergoing dramatic changes. Headlines announcing the Mellon deal merely reinforced what most observers had concluded some time ago.
Even as the Mellon deal was occupying the attention of most industry observers, there was further evidence of significant change this week, though less visible to anyone who hadn't bothered to read between the lines of small print.
To suggest that this other sign of change ranks with the impact of Mellon's likely entry into the state would be an overstatement. Nonetheless, it can be said that an announcement by Citizens Bancorp this week has some historical significance as well as implications for the future -- implications for the bank as well as the industry in Maryland.
Nearly 60 years after it was founded, and four months after being hit with a discrimination suit by the Equal Employment Opportunity Commission, Citizens announced the appointment of the first minority member to its board.
Officials of the Riverdale bank insist that the appointment of James R. Fridie, a biochemist and information analyst, is in no way connected with the suit, which alleges discrimination in hiring and promotion practices. There probably is no connection between the appointment and the EEOC suit. The EEOC has not been informed of the new appointment, according to a spokeswoman, and the suit against Citizens is "still in the discovery process."
As for Citizens, Chairman Alfred H. Smith "had been actively looking for some time to put a qualified minority on the board," according to a spokesman. The opportunity to fulfill that goal arose when Philip Lustine, a former member of Citizens' board and local auto dealer, died, according to the announcement of Fridie's appointment.
Even though both sides either have implied or stated unequivocally that Citizens' choice of a new director is immaterial to the EEOC suit, this development can't be entirely divorced from allegations made by the agency last fall and the climate in which they were made.
The suit against Citizens alleges that the bank "discriminated against blacks and other minorities as a class" in hiring, job assignments and promotions. An agency official accused the bank of engaging in "systemic" patterns of discrimination, which "began at the top and trickled down."
Another EEOC official, in an attempt to explain the agency's action in singling out Citizens, noted: "We look at the things that other banks in the area are doing, such as are they having problems hiring women and minorities."
It must be assumed from that that the EEOC concluded that other Maryland banks aren't having problems hiring women and minorities.
Indeed, they may not be having problems in that regard. But a comparison of other aspects of equal employment opportunities would show Citizens' record isn't unique. The EEOC would be hard-pressed, for example, to make a case that Citizens' competitors have compiled enviable records in promoting blacks and other minorities to senior management positions. The agency's task would be equally difficult if it sought to show that other banks in the area have sought diligently to appoint women and minorities to their boards.
Under Smith, who has been chairman for 40 years, and a tightly woven circle of conservative businessmen and farmers -- most of them, fixtures on the board for years -- Citizens has grown from a small rural bank to the state's seventh largest, and a strong competitor in a largely affluent suburban market. "I don't know about the other banks," Smith remarked in an interview two years ago. "I let them run their business and I kind of hoe my own row."
The decision to name a minority to Citizens' board at this juncture reflects that philosophy to some degree. Smith and his colleagues know Fridie's appointment won't cause the EEOC to pull back. Citizens will have to prove that its hiring and promotion practices have improved.
With a minority sitting on the board, ostensibly in a position to influence policy, Citizens and the new director have an opportunity to erase the negative image projected by the EEOC by effecting improvements in hiring and promotion policies. They can do better than deny the EEOC's allegation that "discrimination began at the top and trickled down." They can refute it.
If not, then the bank runs the risk of being accused of electing a token and a figurehead to the board.
In the meantime, Citizens' appointment of a minority to its board makes it unique among most of its peers in the state. While that may not be relevant to the EEOC, it should be for other banks in Maryland. Before too long, they may be forced to pick up their hoes and follow Smith.