Control over one of the District's oldest banking institutions formally shifted to Baltimore yesterday when Baltimore-based MNC Financial Inc., the region's biggest bank company, named H. Grant Hathaway president of both its American Security Bank and Maryland National Bank subsidiaries.
Hathaway will replace longtime American Security Bank chief executive Daniel J. Callahan, a dominant figure in Washington banking for longer than 20 years.
Callahan, who could not be reached for comment, will become American Security's vice chairman. In this newly created position, he no longer will have operational responsibility for the bank. Instead, Callahan will focus on maintaining relationships with important Washington area customers.
With these moves, Washington-based American Security falls under the supervision of Hathaway, who has been chairman of Maryland National in Baltimore.
The change in management, which was accompanied by several other changes in top positions at MNC, follows the bank company's request last November for permission from the federal government to merge both banks into one, a step that could help the financially troubled bank company cut costs.
American Security and Maryland National formed the MNC bank holding company in 1987, giving them common ownership. But until now they hadn't actually merged their operations or consolidated their balance sheets.
Federal regulators are still considering MNC's request, which would make use of a loophole in the law to circumvent federal banking regulations that prohibit the merger of national banks across state lines.
MNC had expected to receive permission for the merger by the end of 1990.
MNC spokesman Daniel G. Finney said even without a formal merger, "there are plenty of further steps we can take to consolidate the two banks and save money."
Struggling with mounting losses from its $6 billion portfolio of real estate loans, MNC is looking to eliminate the duplicate management, boards of directors and operations of the two bank subsidiaries.
MNC began to reorganize and cut costs last August, a move that already eliminated more than a dozen senior executives and hundreds of employees throughout the bank company's many subsidiaries, including about 50 at American Security.
With the appointment of Hathaway, William H. Daiger will become that bank's executive vice president, although he will continue his retail banking responsibilities for both banks. Daiger had been president of Maryland National.
Callahan, who had been overseeing all corporate customers, will be responsible for only "large and important Washington area customers" and will run a program for acquiring new large corporate deposits, Finney said.
Callahan's "principal talents are as a man of significant influence in the Washington business community and his talents are best deployed" in this area, Finney said.