Shareholders of Abington Savings Bank last week soundly defeated a proposal by the California hedge fund Genesis Financial Partners to sell the Massachusetts thrift.
Officially, approximately 43% of the thrift's outstanding shares were voted against the fund's proposal, which called for management to reduce costs by 20% or look for a sale or merger. About 18% voted in favor of the resolution proposed by Genesis.
"We've believed all along that we had strong support of our shareholders and I think today's vote proved it," said thrift president and chief executive James P. McDonough. "The meeting today gave us a chance to set the record straight and to dispel the myth about the Genesis-created overhead problem."
But excluding those shares owned or controlled by each side at the outset, the thrift's independent shareholders appeared far more evenly split on the issue.
Attempting to belittle Genesis' showing, Abington officials pointed out that since the hedge fund owns 6.4% of the stock, only another 11.5% of the rest of the thrift's shares were voted with the fund. The officials also stressed that management's 43% tally represents "nearly four times" that total.
Newport Beach, Calif.-based Genesis likewise responded that since about 25% of the stock is in the management-friendly hands of officers and directors, the thrift's Employee Stock Ownership Plan, and the thrift's major shareholder, only about 18% of outstanding shares voted with management.
"We won then," said Genesis attorney Jonathan D. Joseph, partner at Pillsbury Madison & Sutro in San Francisco. "The independent shareholders who voted, voted overwhelmingly in favor of the proposal. That's a strong message to management that a large segment of shareholders would like management to do better than they're doing now in terms of improving shareholder value."
In addition to the Genesis proposal, four directors were reelected, including Mr. McDonough, and each received about 77% of the shares that voted. Genesis had called on shareholders to withhold support for the directors.
Attendance at last Wednesday's meeting demonstrated the degree to which Genesis' efforts have attracted public attention. About 150 shareholders were present at the standing-room-only meeting at the Sheraton Tara Hotel in Braintree, Mass. Typically, only about 30 stockholders attend, thrift officials said. Other area bankers also attended the meeting.
"We've gotten a lot of local press about the issue," said thrift spokeswoman Michelle Audette. "More than ever, people came out to support the management."
Abington has been under intense pressure from Genesis since November. In fiery letters to officials, Stephen H. Gordon, president of Genesis general partner Gen Fin Inc., has criticized the thrift for unusually high expenses and low earnings, and suggested specific changes to boost shareholder value.
Genesis, which was founded last summer to invest in underperforming thrifts, is also currently targeting Lawrence Savings Bank and Somerville- based Central Cooperative Bank, both also in Massachusetts. The fund already forced a Pennsylvania company, Media-based First Keystone Financial Inc., to close branches and layoff staff in an effort to reduce costs.
Abington officials say they're now ready to focus on implementing a new three-year plan adopted last summer, before Genesis started investing. Management's plan - details of which haven't been released - calls for higher earnings and lower costs.