Shareholder activism and boardroom maneuvering played a large part in Pointe Financial Corp.'s decision to seek a buyer.
Last week the Boca Raton, Fla., company agreed to be sold for $101.5 million to South Financial Group of Greenville, S.C., which will snap up its 10 branches in Miami-Dade, Broward, and Palm counties.
The deal came several months after Pointe board member Clarita Kassin, a major shareholder, pushed for changes to the board as well as executive compensation, and another shareholder sought management changes. One analyst described it as a "falling out among directors."
Whatever the reasons, the moves have worked for Pointe investors. Shares of the $429 million-asset company were trading in the low $30s before the Oct. 27 announcement of the South Financial deal and are up 15.4% since. The stock closed up 1.2% Wednesday.
The sale price comes to $40.90 per share, a 30% premium.
Pointe has been under new management since 1999, including its chairman, chief executive, and president, R. Carl Palmer Jr., and its chief financial officer, Bradley R. Meredith. In those years the company has nearly doubled its assets. Management intended to turn it from a thrift into a full-service community bank, said Steven C. DeLaney, an analyst at Ryan Beck & Co.
In a telephone interview Tuesday, Mr. Palmer said South Financial "just seemed like the right partner for us." It is "obviously significantly larger than us, and brings more capital and broader array of service offerings."
Mr. Palmer, who is on the Pointe board, is to join the board of one of South Financial's subsidiaries, Mercantile Bank, and Pointe Financial is to be integrated into Mercantile. (The deal is expected to close in the second quarter.)
But Mr. Palmer said it was Ms. Kassin's campaign to set "some kind of liquidity event" in motion that prompted the rest of the board to seek a buyer. As of April 29, Ms. Kassin, of North Miami, owned 246,275 shares of Pointe - about 10.84% of shares outstanding, some outright, the majority held in a limited partnership, and the rest stock options, according to Securities and Exchange Commission filings.
In late April, just days before the annual shareholder meeting, Ms. Kassin filed a proxy statement calling for shareholders to vote against an amendment to the company's incentive compensation and stock award plan for executives "to prevent an increase in the number of options issuable to executives of the company under such plan." She also wanted to shorten directors' terms to one year and make the board smaller. (It should be noted Pointe had filed its own shareholder proxy earlier that month and Ms. Kassin's was a sort of rebuttal proxy.)
Shareholders approved Ms. Kassin's proxy on the compensation issue but not its call for shorter director terms and fewer board members. Ms. Kassin did not return calls by press time.
Meanwhile, Barbara Wortley, a Pointe shareholder in Boca Raton, was cooking up her own plan. In January she approached another Pointe director, Morris Massry, and offered to pay him $200,000 for an option to buy 164,810 shares from him at $24 per share, according to SEC filings. Mr. Massry, 75, a real estate investor and part-time Florida resident, sold Ms. Wortley 50,000 shares, worth $1.2 million, when they entered into the agreement.
As of July, Ms. Wortley owned 104,125, or 4.6%, of Pointe shares. Under the January agreement Mr. Massry sold the shares to her on Oct. 12, making $3.9 million.
Mr. Massry said in an interview last week that Ms. Wortley "was a major shareholder and looking to acquire more shares." He now owns just under 60,000 shares and says he does not regret having waited until after the South Financial deal was announced to divest the 164,810 shares. Mr. Massry recently acquired a nearly 5% stake in Berkshire Hills Bancorp Inc. of Pittsfield, Mass.
Ms. Wortley could not be reached by press time.
But in June, as she was amassing a bigger stake, Ms. Wortley presented her own proxy asking for the removal of Mr. Palmer and two other directors, Timothy McGinn and D. Richard Mead Jr.
According to an SEC filing, Ms. Wortley was "dissatisfied" with the current board, though she offered no suggestions as to who should fill the vacancies.
Mr. DeLaney of Ryan Beck said that when a shareholder is trying to get a management team ousted, "it's usually because that group has approached management to explore the sale of the bank and the management has refused to do so. My guess is that was the intent all along."
Ms. Wortley's proposals never made it to a vote. But "it may be that other shareholders were lining up with her," Mr. DeLaney said.
