A Hinsdale Financial Corp. shareholder who recently settled a lawsuit with the company says the Illinois thrift hasn't done enough to enhance shareholder value.
"I'm not pushing for the bank to run out and look for somebody to buy it," said William E. Jegen, an attorney who became a shareholder when the $670 million-asset company converted from a mutual in July 1992.
"What I am trying to get the board to understand is, if they do not pay attention to shareholder value and liquidity, they may be susceptible to an unfriendly takeover," he said. "It is a legitimate goal to remain an independent bank, as long as you run the bank better than average."
As part of the suit settlement, Mr. Jegen abandoned a proxy fight to get two new directors on the board, including himself. He nevertheless still intends to make a proposal on enhancing shareholder value at Hinsdale's annual meeting on Valentine's Day, believing the board has not paid attention to the issue.
"Instead, the board has merely continued to run a bank in the same manner they were running a mutual savings and loan," Mr. Jegen said.
Kenne Bristol, president and chief executive of Hinsdale, said that although the board agrees that "value hasn't been realized fully," the company has been and remains dedicated to building value and providing information to shareholders.
For instance, Hinsdale's long-term growth strategy includes focusing more on consumer lending and expanding stock and mortgage broker services, he said. The board also declared a special stock dividend last year, he said.
"The things he (Mr. Jegen) has suggested are not new to us," Mr. Bristol said. "Frankly, it's good to see shareholders have concern."
In a recent letter to shareholders, he said the stock price has more than doubled since the initial public offering, generating a 175% total return to shareholders.
But, for the year ended Sept. 30, Hinsdale's return on assets was 0.66% and return on equity was 9.07%, down from 0.81% and 10.73%, respectively, a year earlier.
Mr. Jegen said his proposals to boost value will include a stock repurchase program, performance goals of at least 1.2% ROA and 15% ROE, and "active solicitation" of a merger or other type of sale.
Earlier this month, Mr. Jegen settled his suit against Hinsdale, in which he sought a shareholder list and other financial information. He had wanted the list to solicit support for an anticipated proxy fight over the election of new directors.
The company wouldn't provide the information, so Mr. Jegen sued to get it and $35,531.25 for damages and costs.
Hinsdale was going to provide the information after it was properly requested, said Mr. Bristol, saying Mr. Jegen "rushed to court." Hinsdale is in the process of providing the names, in return for Mr. Jegen dropping the suit.
"In my opinion, they elected to put every obstacle in my way they could think of," said Mr. Jegen, of Glen Ellyn, Ill. "As a result, there will be no proxy contest this year."