An Oregon bank company is suing one of its largest shareholders, claiming he libeled one of its directors.
In its suit, filed last week in U.S. District Court in Portland, Oregon Trail Financial Corp. of Baker City charges that the investor, Joseph Stilwell, has waged an intimidation campaign aimed at forcing the board to sell the company. Mr. Stilwell went too far, the suit says, when he charged that Edward H. Elms lied under oath.
Oregon Trail, the holding company for $389 million-asset Pioneer Federal Savings Bank, did not give the amount of damages it is seeking. President and chief executive officer Berneil L. Maughan was unavailable, and Jonathan P. McCreary, its senior vice president and chief financial officer, declined to comment. Mr. Stilwell, who filed three lawsuits of his own against Oregon Trail between Jan. 5 and May 22 and is in a proxy fight to unseat the board of directors, was equally circumspect.
The record of management and the board of directors is consistent and clear as to how well they have run the institution since it went public, he said in an interview. I trust the judge will decide as to whether the statements Mr. Elms made in his sworn testimony were perjurious or not.
Mr. Stilwell claims that Mr. Elms lied during an April 9 deposition for one of his lawsuits against Oregon Trail. That suit claims another director, Charles H. Rouse, violated the companys residency rule by moving out of its market area to Portland, and it demands his resignation.
Mr. Stilwell, who owns 8.7% of Oregon Trails outstanding shares, filed that suit on Feb. 6. On Jan. 5 he filed another demanding that Oregon Trail turn over a list of its other shareholders and minutes of several board meetings, and on May 22 he filed a third seeking to force Mr. Elms resignation.
Such shareholder suits are not uncommon, but it is unusual for a corporation to retaliate. In a May 29 press release, chairman Stephen R. Whittemore stated that all of Mr. Stilwells litigation is part of his effort to intimidate the board.
Mr. Stilwell is, of course, entitled to his views but he is not above the law, Mr. Whittemore said in the release. He must comply with all legal requirements that prohibit the making of false and misleading statements.
Oregon Trail was created in 1997, when Pioneer Federal Savings Bank converted from a mutual to a stock company. Mr. Stilwell said its return on equity has been less than that of comparable firms. According to the Federal Deposit Insurance Corp., it was 3.63% in 2000, compared with 7.24% return on equity for thrifts with assets between $300 million and $500 million.
Oregon Trail reported net earnings of $1.69 million, or 51 cents a share, for fiscal 2001, which ended March 31.
