Employing a familiar strategy, LaSalle Financial Partners has increased its stake in a California thrift and may try to force its sale.
The Kalamazoo, Mich., institutional investor now owns 8.5% of HF Bancorp, Hemet, Calif.-parent of $1 billion-asset Hemet Federal Savings and Loan Association-after buying an additional 177,600 shares from May 20 to July 8. Its total stake is valued at about $9.6 million.
In a Securities and Exchange Commission filing, LaSalle stated it intends to work with Hemet's board to increase the thrift's stock value by "attempting to implement a business combination." LaSalle is also seeking a board seat, the filing said.
"We hope the board will consider our proposed candidate," said Richard J. Nelson, LaSalle's general partner. He declined to disclose whom that is but said discussions have been cordial.
LaSalle's maneuver came just two weeks after Hemet hired the investment bank Keefe, Bruyette & Woods Inc. to explore its strategic options.
Hemet's chief executive Richard S. Cupp acknowledged discussions with LaSalle but said no conclusions were drawn. When asked about hiring Keefe, Bruyette, he said management is seeking advice as it makes the transition from traditional thrift to a commercial bank-like operation.
Still, "we must be alert to all kinds of opportunities in the market, whether that be a merger of equals or sale," Mr. Cupp conceded.
Hemet is not the first institution of which LaSalle has tried to gain more control. LaSalle, which buys undervalued thrift and bank stocks, recently lobbied for a seat on the board of $542 million-asset HMN Financial Inc., Spring Valley, Minn., in an effort to force its sale. But after the beginnings of a proxy fight, LaSalle withdrew its nominee in April and liquidated its holdings, an HMN spokesman said.
LaSalle was also the largest shareholder of Chicago's Standard Financial Inc., which was sold to Minneapolis-based TCF Financial Corp. last year for $424 million in cash.
Hemet, which operates 19 branches in Riverside and north San Diego counties, is LaSalle's first investment in California.
Martin Friedman, an analyst at Arlington, Va.-based Friedman, Billings, Ramsey & Co., said a sale of Hemet Federal is not out of the question. However, given its recent balance sheet problems, he said he doesn't expect the thrift would fetch much of a premium.
Analysts said the short list of bidders, all from California, could include Bay View Capital Corp., San Mateo; PFF Bank and Trust, Pomona; and Golden West Financial Corp., Oakland.