Only eight months after going public, a Michigan thrift is mired in a proxy fight over its future.
SJS Bancorp's largest shareholder, a Detroit stockbroker who has pressured two other Michigan thrifts into selling, wants to place on the board two directors of his choosing - who would likely push for a sale.
"I believe in shareholder rights, and a lot of times management forgets who owns the company," said Peter T. Kross, who is leading the proxychallenge. Mr. Kross is senior vice president at Everen Securities Inc., formerly Kemper Securities, in Detroit.
"I truly believe that management should be more thoughtful of its shareholders because they are the real owners," he said.
Mr. Kross, who owns about 8% of the company's stock, mailed out proxy material to his fellow shareholders last week, encouraging them to vote two new directors to the board at the thrift's upcoming annual meeting on Oct. 23.
SJS Bancorp, a $135 million-asset thrift located in St. Joseph, has hired a proxy solicitor of its own and has vowed to fight Mr. Kross' challenge.
"Our board is extremely unified in the stance that we've taken," said Thomas G. Watson, chief executive of SJS. "We are not opposed to any type of affiliation with another organization at some point in time, but this is an individual who has one agenda and one agenda only - to sell the bank at the earliest possible time."
Mr. Kross first bought stock in SJS last March, about three weeks after the thrift converted from mutual to stock form. Several months later, he went to Mr. Watson with his candidate for the board, suggesting that the company could use a fresh perspective. SJS rejected the idea outright, setting the stage for the proxy showdown.
Of the 952,200 SJS shares outstanding, about 20% is owned internally, Mr. Watson estimated. The challengers believe a majority of the stock is owned by individuals outside of the St. Joseph area, if not outside the state.
Detroit brokerage First of Michigan Corp., which holds about 1% of the stock, indicated it probably would side with the insurgents.
"We would like to see some outside directors brought in who have experience beyond the local St. Joseph community," said Tony Howard, vice president at First of Michigan.
Mr. Howard agrees with Mr. Kross' assessment that the thrift is undervalued at the moment. The stock is currently trading at just above its June 30 book value of $17.50.
But Mr. Watson contended that growth will come through the company's focus on expanding its mortgage and consumer loan portfolios, which he said increased by 37% as of June 30 from the previous year. Net interest income improved by 30% to $3.5 million during that time, and net income was up nearly ninefold, he said.
Despite these numbers, SJS has a formidable adversary in Mr. Kross. Twice in the past three years he has invested in thrifts which he subsequently pressured into selling. He waged a proxy fight to achieve the sale of the first one - Great Lakes Bancorp in Ann Arbor - to TCF Financial Corp. of Minneapolis.
The second one, FSB Financial Corp. in Kalamazoo, was sold two months ago. In both instances, Mr. Kross achieved the sales by first placing his representatives on the boards.