Shares of an upstate New York bank and thrift took a drubbing Tuesday after the two companies thwarted potential mergers.
At the annual meeting of Syracuse-based Onbancorp, shareholders rejected a recommendation that the $5.6 billion asset banking company seek a buyer. Shares fell 7.58% to $32.75 in heavy volume.
And Trustco Bank Corp N.Y. of Schenectady withdrew its hostile bid for Albank Financial Corp., sending the shares of the Albany-based thrift down 7.66% to $27.125, also in strong trading.
The proposal to sell Onbancorp was placed in the proxy earlier this year by Michael H. Cook, a fund manager with Berkshire Asset Management, which owns 3% of the bank, or 450,000 shares.
Mr. Cook has said that the company's returns are subpar and the bank would be better off as part of another institution.
But an analyst who tracks the company said given the bank's recent improvement, the rejection of Mr. Cook's merger proposal made sense.
"If you measure where the stock is today off its lows last year, when in was in the low twenty dollar range, it is not in such a bad place now," said Kevin T. Timmons, senior bank analyst at First Albany Corp.
"Management is doing a lot of the right things, like reducing the securities portfolio and concentrating on the lending operations. Many shareholders thought they were already heading in the right direction."
Mr. Cook argued that bank management should take little solace from its victory "We are a small firm that submitted a fairly severe proposal and got 37% support," he said. "That is significant and management should consider that as a vote against them."
Over the last five months, Onbancorp management has battled Mr. Cook and Seymour Holtzman, the company's largest individual investor, who also backed the plan to sell.
"The shareholders did not want to see the company sold in the fashion that Mr. Cook proposed," said Robert Berger, the bank's chief financial officer, after the annual meeting.
Of votes cast, 6.05 million were against the proposal to sell the bank, and 3.48 million were in favor. A simple majority of those voting would have been necessary to pass Mr. Cook's recommendation.
There were also five proposals calling for the elimination of the bank's corporate defense measures, including the poison pill. It is unclear whether these were technically nullified because their supporters did not appear to formally introduce them, Mr. Berger said.
Mr. Cook said that it his understanding that three proposals received a majority of votes - including those to eliminate the staggered board and the pill. The results are scheduled to be released in the coming days.
Executives of Trustco told a morning news conference the bank would withdraw its hostile offer for $3 billion-asset Albank, which formally rejected the bid last month.
Albank's "management is so entrenched that it is virtually impossible to have a successful transaction without a negotiated agreement," said William F. Terry, Trustco's director of investor relations.