Harry B. Brock Jr. has fired off another "fight letter" to shareholders of Compass Bancshares , this one questioning the company's earnings record.
Mr. Brock, a Compass director who is waging a proxy battle against the bank's management, accused the company of "using the fruits of its past successes to offset a lack of current performance." Mr. Brock sent his letter to about 20,000 Compass shareholders last week.
Mr. Brock is trying to replace three Compass directors with his own nominees at the April 11 shareholders meeting. His intent is to take control of the 12-man board in order to sell the bank.
In a telephone interview last week, Mr. Brock admitted that his position on the board makes it awkward for him to question the bank's financial situation in public. He said his letter only uses information that was disclosed in Compass' recent annual report.
He also said he had no choice but to respond to Compass' own fight letter, dated March 9, that touts the company's "record" earnings in 1994.
"They have forced me into the position now where I have to critique what they say," Mr. Brock said. "They say it's been the best it's ever been - I say it's not."
In his letter, Mr. Brock pointed out that Compass' noninterest income actually declined last year by 17%. The company was able to report a record year only by reducing its loan-loss provision to $3.4 million, from $36.3 million in 1993.
The lower provision for bad loans allowed Compass to report $99.7 million of earnings last year, for an 11% gain from 1993.
He also criticized Compass chairman and chief executive D. Paul Jones Jr. for using 1994's results to justify his incentive bonus of $318,735.
Compass spokeswoman Ellen Laden responded: "Our 1994 financial performance speaks for itself."
She pointed out that Compass' decision to reduce its loan-loss provision in 1994 was related to the company's low level of nonperforming assets, only 0.33% of total loans at yearend.
Mr. Brock, who founded Compass in 1963, announced his proxy challenge Jan. 27.
Meanwhile, Mr. Brock sued Friday in U.S. District Court in Birmingham, Ala., alleging that Compass provided "false and misleading" material in the proxy letter sent to shareholders. Mr. Brock also alleges that Compass improperly put his signature, and those of two directors who support him, in the company's 1994 annual report.