Seeking to defend themselves against a tide of hostile investors, community banks are increasingly turning to stonewalling.

Bank managers hope that stalling tactics - up to and including going to court - will raise the stakes for activists seeking to wrest control of the banks.

"The more difficult and the more time-consuming you can make it for the insurgent group, the less likely they're going to keep pushing it because they have less money," said Richard Garabedian, a lawyer with Silver Freedman & Taff in Washington. "It's kind of like litigation."

Many law firms are encouraging bank clients stall.

Such tactics can help a small community bank buy time to boost earnings or find a friendly suitor, rather than give in to investor pressure to sell out quickly.

But executives who seem to be resisting just to keep their jobs risk losing the support of other shareholders.

Tactics like refusing to provide a shareholder list and challenging the investor's stock purchases have been adopted by several Massachusetts thrifts facing attacks by Genesis Financial Partners, a Newport Beach, Calif.-based hedge fund.

One of the banks, Somerville-based Central Co-operative Bank, is fighting a lawsuit from Genesis seeking the shareholder list.

The $310 million-asset thrift countersued, claiming the fund used insider information, and is now refusing to hold its annual meeting until the litigation is resolved.

But that decision has a number of shareholders up in arms and looking for answers. The situation demonstrates that while many local shareholders will likely rally to the defense of management, a long fight also can spread irritation among the other shareholders.

"If you resort to actions requiring someone to jump through hoops just to get a shareholder list, then you might risk the wrath of other shareholders who might be sympathetic to the insurgent group," Mr. Garabedian said. "On the other hand, you can require the other side to dot all its I's and cross all its T's. And you can't be faulted for that."

Similar tactics were employed earlier this year by Syracuse-based Onbancorp, which has been battling insurgent Florida investor Seymour Holtzman for months.

The tactic has had some notable successes. Haven Bancorp, Woodhaven, N.Y., resisted persistent merger entreaties from Mattituck, N.Y.-based North Fork Bancorp., which in July bought a chunk of Haven stock. North Fork eventually admitted defeat and sold most its shares.

And San Mateo, Calif.-based Bay View Capital Corp. was facing criticism in spring 1995 from well-known investor Michael Price over its sagging share price. Bay View responded by buying California Thrift & Loan in June 1996, and its stock price has now soared to the level at which Mr. Price expected it to fetch in a sale.

Mr. Price's Heine Securities has since cut its stake in Bay View to 4.9% from 8.6%.

But such determined stonewalling also has costs for the banks. Waging a protracted legal battle can drive the bank's expenses through the roof, especially if a court fight becomes necessary and the bank must hire outside legal counsel, as Central did.

"We have an obligation to our shareholders to protect their interests, whatever it costs," said William P. Morrissey, Central senior vice president. "We have to spend whatever is necessary for the long-term interest of our shareholders."

But that can play right into the hands of shareholder activists, who often complain that unusually high expenses are dragging earnings.

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