A New Jersey golf pro golfer wants a $447 million-asset thrift holding company in which he owns stock teed up for sale, but management and shareholders have knocked his proposal down.
Pulse Bancorp shareholder Steele King introduced a shareholder proposal two weeks ago calling for the company's sale.
Mr. King wanted the board of directors "to facilitate and promote a sale of Pulse Bancorp or its bank subsidiary ... to enable the stockholders to realize the full value of their investment," according to the thrift's proxy statement.
The proposal was rejected, with 66% of the shares present opposed, 25% in favor, and 9% abstaining. About 70% of the 3.8 million outstanding shares were represented.
"We were not expecting this particular proposal to be in our proxy statement," said president and chief executive George T. Hornyak. "We were pleased to see the shareholders voted with the board."
Mr. King, whose telephone number is unlisted, did not return phone messages left for him at the Knoll Country Club in Parsippany, N.J., where he is the club pro.
This isn't the first such attempt to force a sale of a New Jersey thrift. That's because many of the institutions are performing well and are in fast-growing, attractive markets, said Elizabeth A. Summers, first vice president of Ryan, Beck & Co. She cited a similar proposal rejected by Bancorp New Jersey shareholders last spring.
But Ms. Summers cautioned against comparing South River-based Pulse to other institutions in the state. She noted that unlike other acquisition targets, Pulse caters to an ethnic Polish community.
"I'm not sure an acquirer would be as successful in exploiting that niche as Pulse is," she said. "There have been some high takeover premiums in the state. Shareholders look around and they want that premium. They make a mistake when they say their thrift should get the same premium the others did."
Mr. King, who has been a stockholder for five years, argued that an immediate sale is justified because New Jersey's financial institutions have been viewed in the press as likely acquisition targets when interstate banking takes effect.
And based on the recent acquisitions of Charter FSB Bancorp Inc. by Sovereign Bancorp and VSB Bancorp Inc. by UJB Financial Corp., he continued, Pulse shareholders could reap profits far above the company's current market price, which was $15.75 on Monday.
He also warned that rising interest rates could prevent possible acquirers from offering high multiples later.
But thrift officials rejected his arguments, noting that although they must consider any legitimate offer, putting out the for-sale sign would hurt the thrift and its stock by confusing customers, employees, and investors.
Also, they say, there's no guarantee that shareholders will really get such a high price, while they have received a higher-than-market return on their stock as an independent company.
Pulse, which converted to a stock institution in September 1986, has paid continuous quarterly dividends since 1987 amounting to $14.20 a share, plus two stock splits in the form of stock dividends, officials point out.
Also, the stock has appreciated by 231% since the conversion.