Chicago-area Damen Financial Corp. is facing a Jan. 27 showdown with shareholders.
An unidentified stockholder is forcing a vote on whether Damen should hire an investment banker to analyze the $230 million-asset company's options. Under the resolution published in a proxy statement, Damen's board would hire an investment banker to consider selling the Schaumburg, Ill., banking company, selling one or more of its three branches, or buying back more stock.
Damen officials are urging shareholders to vote against the resolution at the annual meeting this month, according to a letter from chairman Mary Beth Poronsky Stull. Reached for comment, Janine M. Poronsky, a bank vice president, would not say why Damen opposes the resolution or whether it plans to stay independent.
One large shareholder said he believes the investment banker resolution will pass. Paul J. Duggan, who through two hedge funds controls 11.6% of Damen's stock, said he is among a growing number of shareholders who want to sell, spin off some branches, or revamp dividend policy.
"I have invested in 175 thrifts, and this is the worst-run thrift in the country," Mr. Duggan said. Damen converted from a thrift to a national bank in early 1997.
Mr. Duggan said he is not the unnamed shareholder in the proxy statement.
Damen has paid too much to buy back its own shares, he said, distributes little of its earnings to shareholders, and pays its executives exorbitantly.
A plan to run an alternative slate of directors against the candidates endorsed by Damen's management is also on Mr. Duggan's agenda.
But Heather Rosenkoetter, a thrift analyst at Friedman, Billings, Ramsey in Arlington, Va., said Mr. Duggan and other disgruntled shareholders don't have much to complain about. Damen's stock is trading at about 116% of book value, which is on par with similar Illinois institutions. The company also has consistently increased its dividend and bought back shares, she said.
"You can't argue that they've done nothing to enhance shareholder value," she said.