A New England investment banker is blasting the performance of a Connecticut thrift he took public a decade ago, suggesting in a routine industry report that the institution would be a suitable target for an aggressive shareholder activist.
In his yearly survey of New England banking, Stanley T. Wells, executive vice president of Keefe, Bruyette & Woods Inc. in Hartford, questions why shareholder activist Genesis Financial Partners is targeting Massachusetts' Abington Savings Bank rather than $215 million-asset Tolland Bank in Connecticut.
Genesis, a California hedge fund led by former investment banker Stephen H. Gordon, has been sharply criticizing the performance of several Massachusetts thrifts, including Abington, demanding that they either beef up or sell out.
But Mr. Wells noted that Abington actually has had the second-best return for shareholders over the past five years among all New England banks, partly because the institution's stock was so depressed five years ago that it had lots of room for improvement.
"It is difficult to explain why an activist shareholder recently targeted Abington Savings Bank," says the report, which is co-authored by analyst Frederick W. Wassmundt. "His efforts to 'make things happen' might be more appropriate if directed toward Tolland Bank, with a history of poor shareholder returns and below-average fundamental ratios."
That drew a sharp exclamation of surprise and protest from Tolland president and chief executive Joseph H. Rossi, who took over in January after former president Guy Cambria Jr. retired.
"I was surprised that Keefe would write something like that," Mr. Rossi said. "We are working very hard at Tolland to get the earnings up as high as possible. That's what we're trying to do."
Tolland Bank has been struggling since 1989 with high levels of problem assets and some losses. The thrift reported a loss of $1.1 million for 1995 because of charges in the second quarter related to disposing of nonperforming assets.
Mr. Wells noted that in 1987, one year after Tolland went public, the thrift earned a 1.12% return on assets and had an equity-to-assets ratio of 14.48%. Keefe, Bruyette underwrote Tolland's public offering in 1986, a deal led by Mr. Wells.
At the end of 1995, however, Tolland reported return on assets of only 0.67%, and its equity-to-assets ratio was down to 6.15%.