Onbancorp's stock fell in heavy trading Wednesday after its largest shareholder, Seymour Holtzman, proposed that the bank's management sell to or merge with a stronger financial institution.

In a press release, Mr. Holtzman complained that the Syracuse, N.Y., company's stock price had slipped 15% in three years, to $35 a share, from $41.25 on Oct. 15, 1993. Onbancorp's share price declined 50 cents Wednesday, to $34.50.

One analyst, who asked not to be named, agreed that Onbancorp's return on equity of 11% to 11.5% is below that of its peers but said management has taken steps to improve.

"They've downsized their balance sheet and reduced their borrowings to total assets," said the analyst. "But their core basis return on equity is approaching 12%, and I expect as much as 13.5% for next year."

Indeed, Onbancorp's stock price has rebounded 6% in the last month. But Mr. Holtzman, who owns 2.5% of the company, argued that shareholders could get $46-$58 per share in a sale.

Mr. Holtzman is known as a tenacious campaigner. In a 1995 proxy fight against First Financial of Western Maryland, he bought ads in Maryland newspapers that depicted bankers as pigs in pinstripe suits. He plans a similar campaign in Syracuse.

"Onbancorp has a chairman that has a huge compensation of half a million dollars and little interest in enhancing shareholder value," said Charles Garcia, Mr. Holtzman's attorney.

Robert J. Bennett, Onbancorp's chairman, countered that a proxy fight would be costly to stockholders.

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