The recent exit of top personnel from Keefe Managers, a New York investment firm, has hurt the shares of St. Paul Bancorp., a Chicago thrift holding company.
Keefe Managers, one of St. Paul's largest shareholders, had been threatening a proxy contest to pressure the company to sell because of its lackluster earnings and performance.
But the departures last month of Keefe Managers president Matthew F. Byrnes and senior analysts Marge Demarrais and Felice Gelman may put those efforts on hold - or derail them.
The departures "could get St. Paul off the hook," said bank analyst Caren Mayer of BankAmerica Corp.'s NationsBanc Montgomery Securities. "They were clearly leading the charge."
Some investors think so as well. St. Paul's share price fell two weeks ago after word circulated in the market that the trio had left Keefe Managers.
St. Paul shares fell 6% in value during the two weeks in which the trio departed, and had not recouped the loss by week's end. The share price fell 6.25 cents Friday, to $21.875.
"People sold the stock in anticipation of Keefe pulling back its proxy contest," said bank analyst Stephen Skiba of ABN Amro Inc. "People knew Matt Byrnes, Marge and Felice were handling the St. Paul situation. At the last conference call, it was Marge and Felice that were putting management's feet to the fire."
Management at St. Paul, which wants the company to remain independent, offered a few careful comments on the situation. "Whatever happens, we are going to stay focused on our business strategy," said Robert N. Williams, director of investor relations at St. Paul. He also said Keefe Managers' proxy-related filings are still being evaluated.
Keefe Managers' top team is gone but the firm's founder, Harry V. Keefe, remains, St. Paul director Jean C. Murray said.
"I don't think he will withdraw it," Ms. Murray said of Mr. Keefe's proxy materials. "Mr. Keefe is an interesting man and commands a lot of respect. I don't know why he has chosen this crusade, but I think he will probably go ahead with it."
Even if Mr. Keefe decides to pull back, others might be willing to pick up his cause.
Mr. Skiba of ABN Amro asserted that his company and Charter One Financial are ideally suited acquirers for the company. St. Paul reportedly rebuffed informal discussions from both companies.
Last quarter, the Chicago thrift's earnings suffered because of mortgage prepayments. The company has performed below its peers for a while, noted bank analyst Heather D. Rosenkoetter of Friedman Billings Ramsey & Co., Arlington, Va.
"With the amount of capital they have, they should be returning more to the shareholders," she said.
Others maintain that the push to sell will be sidelined while Mr. Keefe gets his company in order. Consequently, they expect St. Paul's stock price to drift downward as merger prospects dwindle.
"I think everybody believes the possibility of near-term sale is less likely," said Terry Maltese, president of Sandler O'Neil Asset Management. "The company trades four multiples more expensively than Charter One, and there is a big difference in performance in the two companies. The stock price trades that way because there is still some takeover premium left in it."
