The activist investor Seymour Holtzman is blasting the management of Pathfinder Bancorp Inc. for refusing to consider a sale to a rival upstate New York thrift.
Mr. Holtzman, a Pathfinder shareholder who has been pushing for a sale since March, said this week that executives of $255 million-asset Fulton Savings Bank phoned him about a month ago to help arrange a possible deal.
Fulton contacted Mr. Holtzman after it was rebuffed by Pathfinders management, he said, adding, management has no interest in talking to anyone at any price.
Thomas Schneider, the president and chief executive officer of Oswego-based Pathfinder, would not confirm whether an offer is on the table. He would say only that he has not had an opportunity to meet with the board. Mr. Holtzman has been a shareholder of ours for many years, and he likes to operate in a public forum on some of these issues. And theres just no real advantage for us to operate in a public forum.
Michael Pollock, Fultons president and CEO, refused to comment on whether the thrift has made an offer for the $235 million-asset mutual holding company.
Pathfinder is the parent of Pathfinder Bank, which has five branches. The company owns 60% of the outstanding stock, and Mr. Holtzman owns 16% of the one million shares that are held by the public.
Documents filed with the Securities and Exchange Commission said that Mr. Holtzman sent a letter to Pathfinders chairman, Chris C. Gagas, in March urging that the company do a second-step stock conversion or merge with a larger institution.
Last month Mr. Holtzman filed another document stating his concern at the companys financial performance and its stock price. In this document, he also reiterated suggestions that Pathfinder fully convert to the stock form of ownership from its current hybrid structure and find a buyer.
Later that month he sent another letter to Mr. Gagas saying he was disappointed that Pathfinder had refused to meet with Fulton executives to consider an offer to acquire Pathfinders publicly held shares at a price in the range of the mid- to high teens, which would total about $15 million.
Based on my recent meeting with senior management at Fulton Savings, I was under the impression that Fulton Savings would be submitting an offer to Pathfinder in an amount significantly in excess of the market price of the stock, Mr. Holtzman said.
Pathfinders stock price has nearly doubled since Mr. Holtzman began agitating for a sale five months ago. It peaked at $11.70 a share this month and closed at $11.35 Thursday.
Though the pressure from Mr. Holtzman has been good for Pathfinders stock price, the investors said that the companys earnings remain a concern. Pathfinders second-quarter net income rose 18.4% from the year earlier, to $356,000. Its return on equity climbed 83 basis points in the same period, to 7.09%, but Mr. Holtzman says he is not impressed.
The bottom line at any bank is what are the earnings and what type of equity return, he said. This banks 7.09% is awful.
Mr. Holtzman, the president of Jewelcor Management Inc. in Wilkes-Barre, Pa., is well known in the industry for pressing community banks to sell. This year alone he has presented to shareholders proposals to remove takeover defenses from the bylaws of at least seven community banks in which he owns stock.
It is because of his reputation and the fact that, outside of the company itself, he is Pathfinders largest shareholder that Fulton contacted him, he said. I guess they know my reputation as being a shareholder activist in the banking industry, and they wanted to see if I could assist them in any way.