The board of directors of James Madison Ltd., parent of Madison National Bank, forced out the bank company's president and reassigned other senior executives last week amid mounting losses from commercial real estate loans.
According to bank officials, James Madison President James A. Baker has left the District-based bank company, which made its name as the lender of choice for many commercial real estate developers. Other executives of the bank company, including senior vice president Richard J. Seaman, also were forced to leave, the officials said.
Baker has been temporarily replaced by Michael J. Powers, a former bank regulator who was only recently hired by Madison to supervise a review of every loan over $500,000. Powers also was promoted to executive vice president of the parent firm, bank officials said.
Changes at the James Madison parent company were accompanied by changes at Madison National Bank, where Chairman Norman F. Hecht Sr., also chief executive, was stripped of his duties. Hecht was replaced by Donald Menefee, who also continues as chairman and chief executive of the parent firm.
Bank officials said that while Hecht lost his job as head of the bank, he was promoted to vice chairman of the board of directors of the bank's parent, a position that did not exist previously.
According to sources familiar with the bank, several members of the board of directors have resigned as well, including real estate investor Richard S. Cohen. Bank officials confirmed that there had been resignations from the board but declined to identify who had left.
Troubled real estate developer Dominic F. Antonelli Jr., one of Madison's founding directors, resigned from the board earlier this year. Antonelli had borrowed millions of dollars from Madison and is now asking the bank and other lenders to renegotiate hundreds of millions of dollars of real estate loans instead of forcing him into bankruptcy.
Sources said the recent resignations from the board were prompted by fears that directors would be held liable for the bank's mounting financial problems. Like most banks in the area, Madison has suffered severe losses from the area's commercial real estate slump.
Madison lost $16 million on commercial real estate loans in the third quarter and its problems have led federal banking regulators to force the bank company to eliminate dividend payments and cut expenses.
Madison operates 10 branches in Washington and Maryland and has $900 million in assets.
The company cut its work force from 641 to 571, an 11 percent reduction, in the first nine months of the year and it has closed its Annapolis Financial Service Center, its home-banking subsidiary and its equipment-leasing subsidiary.