Still wary of a neighbor's intentions, Suffolk Bancorp of New York is trying again to increase its authorized shares dramatically, possibly for emergency use to ward off hostile takeover attempts.
Bank officials expect to call a special meeting this summer at which they will ask shareholders to approve doubling the company's authorized shares to 15 million.
The increase would enable Suffolk's board of directors quickly to issue more shares for use in acquisitions, dividends, or other purposes without having to get stockholder approval each time, said president and chief executive Edward J. Merz.
Officials could also use the shares as part of a shareholder rights plan, which the board plans to adopt to head off any hostile takeover bids.
"We want to be prepared to (issue stock) as the need arises," Mr. Merz said. "What better time to do it than now, rather than later when you may lose precious time."
Suffolk officials are engaged in a bitter public battle with Long Island rival North Fork Bancorp. The $2.8 billion-asset Mattituck-based company already owns 4.5% of Suffolk's stock and has applied to the Federal Reserve Board for permission to acquire up to 19.9%.
But Mr. Merz denied that the stock increase proposal is aimed at warding off North Fork.
"We would like to have that ability, no matter who comes along," he said. "It's still our mandate to remain independent. We're not doing it at this time solely for the purpose of fending off North Fork Bank."
Although a sharp hike in authorized shares, the plan is scaled back dramatically from an earlier proposal to quintuple shares to 37.5 million, with par value reduced to $1 from $5.
That plan confused shareholders, forcing the bank to withdraw the proposal in early April, just before the annual meeting.
There won't be any change in par value under the current proposal.
The $781 million-asset bank also intends to repurchase up to 10% of its 3.8 million outstanding shares because it's generating internal capital faster than it can use it. The bank's Tier 1 risk-based capital ratio at March 31 was 12.48%.
