It probably ranks up there among a bank chief executive's worst nightmares: A director blabs to a reporter about a split on the board over the company's future.

That's what happened last week at $1.8 billion-asset Cole Taylor Financial Corp. of Wheeling, Ill. The contending parties are the founding Cole and Taylor families, each of which owns about a quarter of the company's stock.

To be sure, bank shareholders in general have become more vocal about grievances with management and the future of the institutions in which they have invested - and board members who happen to be large shareholders are no exception.

"It's happening more and more because there's so much more turmoil in the industry," said David Baris, executive director of the American Association of Bank Directors, Bethesda, Md. "There are competitive pressures.

"You also have the active merger market," Mr. Baris added.

Lauri Cole, who spilled the beans last week about the split at Cole Taylor, says the hot market is why her family wants the board to investigate the possibility of sale.

Ms. Cole's father, Irwin, was a co-founder of the bank.

Jeffrey W. Taylor, son of the other founder, Sidney Taylor, is the company's chairman and chief executive.

Jeffrey Taylor said he believes the current business plan is best for Cole Taylor. And, he said, it's not the company's practice "to publicize our board discussions in the news media."

Going public with boardroom brouhaha also doesn't sit well with Mr. Baris of the directors association.

"Generally speaking, we think that the board of directors should be able to meet and discuss issues without public scrutiny," he said.

George Freibert, president of Professional Bank Services in Louisville, Ky., agreed. "I think it's to the detriment of everyone to wash your laundry in public," he said. "When you divide the board and divide the shareholders, almost always the result is less value for the shareholders."

Robert C. Ollech, an analyst at Howe Barnes Investments, Inc., Chicago, agreed that board discussions should remain confidential. He added, though, that since disclosure does fuel takeover speculation, it can move stock prices up, as it did to Cole Taylor's last week.

But even Jeffrey Taylor said last week he wasn't all that surprised at the news.

When partners become less active in the business, "it's not uncommon for them to start looking at alternatives other than staying the course," he said.

Emotional ties to a bank and its community can diminish when aging shareholders pass their stock along to the next generation, bank consultants said.

"The younger shareholder is more likely to be financially driven," said Peter Merrill, a principal with Chicago-based A.T. Kearney.

In general, shareholders have become more vocal toward management, said analyst Linda Stromberg of M.R. Beal & Co., New York.

"In the past, shareholders have been very passive," said Ms. Stromberg, a vocal stockholder herself who opposed a recent thrift merger-conversion deal in Chicago that later was terminated.

"If shareholders are dismayed by some action by management, they used to sell the stock," she said. "Now they're speaking up."

She added: "You have Michael Price being more active. As people see that strategy works - Michael made a lot of money - people are going to jump on the bandwagon."

The fact that the players in the Cole Taylor case are from the company's two founding families is more unique, but still pits management against investors, Ms. Stromberg said.

So what does management do?

Such conflicts force them to evaluate an institution's long-term future, Mr. Ollech said. "Were I a manager, I'd have to say, 'Can I earn my shareholders what they could get?'" in a takeover, Mr. Ollech said. "'Are they better off sticking with me for five years or selling out and taking an initial pop?'"

The bank's president, who typically is also a board member, has a legal responsibility to do what's best for the shareholders, Mr. Baris said.

However, "It's not always clear what's best," he declared.

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