A small Philadelphia savings bank's investment in a fledgling banking Web site has sparked a shareholder insurrection.
Nashville investor John Wilson Spence 3d fired the opening salvo last month, demanding that Jade Financial Corp. in Feasterville, Pa., release its shareholder list so that he could share his complaints with other investors.
Jade is the $202 million-asset parent of IGA Federal Savings Bank, a former credit union that converted in October.
Now, two more investors have joined Mr. Spence in questioning the soundness of Jade's management: Warren Mackey, who controls 9.99% of Jade's 1.8 million outstanding shares, and Lawrence Seidman, who controls 7.4%. The 18.59% total makes them a serious threat.
Like Mr. Spence, Mr. Mackey, whose office is in New York, and Mr. Seidman, of New Jersey, oppose Jade's decision to invest $2.5 million in BankZip.com. The site is to begin operating in May and is billed as "the world's first Internet alliance designed specifically for community banks."
"I do not want to be a part of that," Mr. Mackey said. Jade "took a sizable amount of their capital and made a risky investment with it."
"When they went public, they sold themselves as a community bank. That is a business I can understand and I can make money in as an investor."
Mr. Seidman called Jade's BankZip investment "total stupidity," and Mr. Spence said it was "very ill-advised."
The trio also say they think management is delaying in setting a date for an annual meeting. Jade went public Oct. 4 of last year and is required by law to have a stockholder meeting by its first anniversary - but not to set a date for one this far in advance. "I'm just going to wait patiently," Mr. Seidman said. "At some point my patience will run out, but I do not know when that point will be."
Domenic DiPillo, vice president for marketing at Jade, confirmed that no shareholder meeting date has been set but declined to comment further.
Conflicts between the management of small thrifts and their shareholders are becoming increasingly common as rising interest rates bite into profitability. Mr. Spence is involved in a similar campaign in West Virginia, where he is pressing officials at Sistersville Bancorp to consider merging with a larger company.
"Small thrifts are dinosaurs," Mr. Spence said. "There is no reason for them to come public unless they intend to sell out."
Management, not surprisingly, views the situation differently.
"I am sure Mr. Spence is frustrated with financial stocks in general. It is not just the small thrifts that have gotten beaten up," said Stanley Kiser, Sistersville Bancorp's president. "He is looking at things from a different angle. He has no interest in Sistersville or the community."