A group of shareholders of a Connecticut bank are waging a proxy battle to reinstate its popular former chief executive, who was fired in January.
Bank of South Windsor Shareholders for Truthful Reporting is proposing an alternate slate of three directors for approval at next Thursday's annual meeting. The slate includes former president and chief executive Donald R. Page and two local businessmen, Salvatore Garofalo and Richard S. Veneziano.
Ironically, the board at Bank of South Windsor already includes a director who is also named Salvatore Garofalo. The two are not related.
The group also wants Mr. Page reappointed as president. He says he wouldn't take the job but would accept a directorship.
The dissidents are seeking to oust chairwoman Barbara Barbour and two other directors, Richard S. Kelley and Robert Smith.
The group, which is led by shareholders Paul J. O'Bright and Nancy Watt, also wants stockholders to reject a board proposal to reduce the number of directors to 12 from 13.
Ms. Barbour dismissed the shareholders' concerns, noting that Mr. O'Bright has never called her to discuss the issue.
"Whenever a situation like this occurs, you hear a lot of noise going on, but it doesn't necessarily reflect a lot of shareholder votes," she said.
The $125 million-asset bank has found itself under attack by angry customers for several months over the board's dismissal of Mr. Page on Jan. 27. Protests were held on two consecutive Saturdays in February, drawing more than 50 people to picket the bank's headquarters.
Some customers have even threatened to withdraw deposits in opposition to the bank's actions, but Ms. Barbour said there hasn't been any significant withdrawal.
The strong community backlash has surprised some observers, despite Mr. Page's popularity in his native community, where he is also president of the Chamber of Commerce and president-elect of the Rotary Club.
"I wouldn't have thought that a grass-roots ground swell of support could be coalesced so quickly around a deposed bank resident," said John Carusone, president of the Bank Analysis Center in Hartford, which works with the bank.
Ms. Barbour said the board acted after the bank lost more than $273,000 from derivatives investments that violated its investment policies and were made without board knowledge.
Also, she said, the board believed that the initial call report for last Dec. 31, which showed a profit of more than $185,000, didn't reflect enough of a provision to cover increasing nonperforming assets of $4 million.
The bank eventually revised earnings twice, to add a total of $900,000 to the reserve, reporting a total loss of $436,000.
But Mr. O'Bright asserts that the revised earnings were just an accounting coverup, according to the Hartford Courant.
He says the real aim was to give the directors an excuse to get rid of Mr. Page, who just before his dismissal challenged Ms. Barbour, Mr. Smith, and Mr. Kelley for taking the bank away from its local-lending mission, the newspaper said.
Mr. O'Bright, a self-employed accountant, also accused directors of using Mr. Page as a scapegoat for their own lending mistakes.
"Don is not a yes-man," Mr. O'Bright said. "He would not bow down to the board of directors. They figured the only way to get around him was to fire him and bring in someone who was a yes- man."
Ms. Barbour denied that the firing was linked to any personal issues and rejected Mr. O'Bright's assertion that directors are responsible for bad loans.
"If there are bad loans, management of the bank has to look to itself," she said. "They can't hang that on the directors. Directors oversee policy. They don't run the bank on a daily basis."
The dissidents need 450,000 of the bank's 941,239 shares in order to oust the three officials. So far they've received commitments from at least 200,000 shares, including one of the current directors, Mr. O'Bright said.
"The bank directors are going to be extremely surprised at the amount of support that we have," Mr. O'Bright said. "We got (a director) to break ranks - and if we've got one, we can also get more."