Time appears to be running out for People’s Bancshares.

Angry shareholders — who nearly took control of the New Bedford, Mass., company in June — are calling for the immediate resignations of its two top executives and have vowed to wage another proxy battle if People’s fails to find a merger partner before next year’s annual meeting. And given the string of troubles that has beset People’s in recent months, the dissidents are likely to succeed. Indeed, there are hints that management is preparing to sell the $1.1 billion-asset bank. Last month People’s brought in as chief financial officer James K. Hunt, a veteran New England banker who negotiated the sale of the last three banks that hired him.

Since the last proxy fight, both the Federal Deposit Insurance Corp. and the Federal Reserve Bank of Boston have censured People’s for its controversial decision to invest heavily in trust-preferred securities issued by other banks.

In August, People’s reached an informal agreement with the FDIC that required it to gradually pare its portfolio of trust-preferred securities. The Boston Fed took a stronger step last week when it barred the company from issuing dividends, paying interest on its trust-preferred securities, or buying back its stock without first obtaining permission from state and federal regulators.

The dissident investors — who openly questioned People’s investment strategy months before regulators stepped in — were predictably livid.

“The circle is complete. The board has lost control of this bank,” said Thomas Gillen, one of the principals of RGC Kingston Group, a New York investment partnership that owns 5% of People’s stock.

Vincent Smyth, a New York attorney who owns almost 6% of People’s shares, was even harsher, calling for the immediate resignation of chairman Frederick W. Adami and chief executive officer Richard S. Straczynski. Neither man returned phone calls seeking comment for this article.

“If they are going to take credit when things go good, they have to walk the plank when they fall apart,” Mr. Smyth said.

He and Mr. Gillen said they would mount a new proxy fight if People’s does not sell itself before its next scheduled annual meeting, in June.

Said Mr. Gillen: “We will get some new blood on the board for one purpose only, and that is to sell the bank. That is our only salvation.”

The shareholders may get sympathy from Mr. Hunt, People’s new CFO and executive vice president for finance and administration. Though Mr. Hunt stopped short of saying the company was for sale, he made it known that he has “a number of longstanding relationships” with investment bankers.

“I’m going to remain in contact with those people, and if an opportunity arises, I’m going to do the right thing,” Mr. Hunt said.

Meantime, it is his task to unload the trust-preferred portfolio. He did not say how long the sale would take, but noted that it will shrink People’s asset size and reduce earnings by as much as a third.

People’s officials did not say exactly how much money the company had invested in the rate-sensitive trust-preferred, but its latest quarterly report said its investments held to maturity, including all of its trust-preferred holdings, were $524 million, or 49% of its assets. The FDIC says most banks the size of People’s invest about 25% of their assets in all types of securities.

Trust-preferred securities have gained popularity with community banks in recent years. But while most have sold trust-preferred securities as a tool to raise capital, People’s took the unusual step of buying them.

Regulators’ strongest objection to trust-preferred securities centers on their illiquidity. Demand for the instruments falls dramatically when interest rates rise or when concerns over credit quality multiply.

People’s admitted as much in its last quarterly report. It said in the report that the market value of its portfolio of securities held to maturity — the bulk of which is made up of trust-preferred securities — had fallen to $471 million, $53 million less than its $523 million book value.

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