When Central Bancorp Inc. in Somerville, Mass.,
Now Mr. Schutz, who manages a fund that also owns a large stake in Central, has agreed to a similar buyout.
The $555 million-asset Central announced Thursday that its employee stock ownership plan would buy back 109,600 shares from Mendon Capital Advisors Corp. of Rochester, N.Y., and its affiliates at $33 a share, or $3.6 million. Mr. Schutz is the president of Mendon, which, in addition to managing its own stake in Central, also manages the investment of Burnham Asset Management Co. of New York.
John D. Doherty, Central's president and chief executive officer, has also agreed to buy an additional 13,400 of Mendon's shares at $33 each.
The price would be a 4.3% premium over Central's closing price Wednesday - an even higher premium than what Central paid for PL Capital LLC's shares in 2004. At that time, Mr. Schutz called Central's privately negotiated $5.1 million deal with PL Capital "disgusting" and said that Central "behaves as if it is not a publicly traded company," and that regulators should scrutinize its actions.
Mr. Schutz did not sell off his firm's stake then, because he said he believed that Central, which has nine branches and one limited-service high school branch in the Boston area, was an attractive takeover target.
However, for years Central has resisted activist investors' calls for it to sell itself, and its deals with Mr. Schutz appear to make a sale even less likely. Insiders already own 42% of Central's outstanding shares, and their stake would increase to about 49.5% after the acquisitions of Mendon's and Burnham's shares are completed.
Mr. Schutz was not available to comment, so it is unclear why he has decided to sell the shares now.
William P. Morrissey, Central's chief operating officer, would say only that Thursday's news release "speaks for itself." Central's shares closed $31.40 Thursday.
Central plans to issue $6 million of trust-preferred securities to fund the buyback. It also plans to use proceeds from the securities to refinance an existing loan to its employee stock ownership plan from an outside bank.
Over the past few years the company has underperformed in comparison with all savings institutions with assets of $100 million to $1 billion. At the end of the third quarter Central had a return on equity of 4.32% and a return on assets of 0.32%, compared with a 7.88% ROE and a 0.87% ROA for others in its asset class, according to statistics from the Federal Deposit Insurance Corp.
PL Capital, of Naperville, Ill., had been agitating for Central to sell itself for about three years before selling its more than 154,000 shares back to the company in 2004, and had even won representation on Central's board.
PL Capital sold its shares back to Central for $33.25 each, or 3.2% above what the stock was trading at the time.
That prompted Sandler O'Neill Asset Management LLC to ask Central to buy back its shares at the same price, and when the offer was rebuffed, Sandler quickly sold its shares on the open market.
