Permanent Bancorp. of Evansville, Ind., bought out dissident shareholders after they agreed to never buy another share of the $505 million-asset thrift company.
Permanent paid $4.1 million on Aug. 25 to repurchase the 7.3% stake owned by LaSalle Financial Partners LLP. LaSalle is headed by a pair of former Kalamazoo, Mich., bankers who invest heavily in thrifts and then push the companies to sell.
Permanent took out a loan to buy back the shares at a market price of $13.75 each, according to filings with the Securities and Exchange Commission. LaSalle gained as much as 13% on portions of its Permanent portfolio, which it had accumulated over 18 months, the filings show.
Donald P. Weinzaphel, chairman and chief executive of Permanent, said the 20% dip in its stock price last month made it an opportune time to buy out LaSalle. LaSalle's principals, Richard J. Nelson and Peter T. Kross, did not return phone calls seeking comment.
Mr. Weinzaphel said the buyout gives Permanent more time to focus on improving its returns, which have lagged behind those of its peer group. He said management was "distracted" in the summer of 1997 while LaSalle tried unsuccessfully to include a board candidate on Permanent's proxy.
"It's something we can get our mind off of now and move forward," Mr. Weinzaphel said. "Our No. 1 objective is to improve our performance."
In the 12 months ended March 31, Permanent Federal Savings Bank earned a weak 0.68% return on assets; the national average for thrifts with $500 million to $1 billion of assets was 0.97%.
To boost its returns, Permanent started a commercial loan department about 18 months ago. And in the second quarter it purchased four branches with commercial loan portfolios from NBD Bank, a subsidiary of Chicago- based First Chicago NBD Corp.