People's Bancshares took a first step toward restructuring its over-leveraged balance sheet Thursday, but some investors said they were not impressed.

The $1.1 billion-asset thrift company, which is based in New Bedford, Mass., said it would sell $30 million of higher-risk assets and work to reduce higher-cost interest-bearing deposits. The move came one year after investors started to press People's management to reduce the leverage on the company's balance sheet.

State and federal regulators have been pressuring People's recently to reduce its exposure to trust-preferred securities. This month the Federal Reserve Bank of Boston barred the company from issuing dividends to preserve capital.

The restructuring will exact a heavy price. People's said its fourth-quarter earnings would be in a range of 35 cents to 37 cents, far below the 81 cents analysts were expecting, according to First Call/Thomson Financial. Shares of the company fell 56.23 cents Thursday, or 4%, to close at $13.50.

James K. Hunt, who was hired as chief financial officer last month, said the step was the beginning of a full-blown restructuring program. "I came on board to initiate the regulators' suggestions," but more work needs to be done, he said.

Mr. Hunt said that he could not quantify the impact of the measures that have been taken, but that Thursday's action was a "very positive" first step.

Investors, however, are likely to voice even stronger reservations about the company at next year's annual meeting.

Thomas F. Gillen, a principal at RCG Kingston Fund, said he and other shareholders would ask Richard S. Straczynski, People's president and chairman, to resign. Restructuring the balance sheet would provide short-term relief, but in the long run the company has to sell, he said.

Mr. Gillen blamed the management for putting earnings and dividends in jeopardy. "The board was betting on an interest rate cut" from the Federal Reserve, he said. "Now, the shareholders have to pay the price."

The board should find an investment bank to help it find an acquirer or risk a serious fight with investors at the next shareholder meeting, he said.

Mr. Hunt declined to discuss any plans to put the company up for sale. However, a Dec. 18 article in American Banker quotes him as saying that he has "a number of longstanding relationships" with investment bankers.

Those familiar with the company said it could be an attractive pick-up. People's does not have credit issues to speak of, and considering the tight competition for deposits in New England, competitors like Banknorth Group Inc. of Portland, Maine, or Charter One Financial Inc. of Cleveland might be interested in its $620 million deposit base.

Nevertheless, since the company has an overloaded balance sheet, People's might draw a price as low as $7 per share, some observers said.

Elsewhere in the market, Claire M. Percarpio, an analyst at Janney Montgomery Scott LLC in Philadelphia, downgraded Commerce Bancorp of Cherry Hill, N.J., to "accumulate" from "buy."

The cut was based "strictly on price," and Commerce "is one of the best growth stories out there," Ms. Percarpio said. "The business model and execution is terrific."

Commerce shares rose 75 cents, or 1.08%, to $70.

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