A South Carolina thrift rebuffed corporate raider H. Jerry Shearer's offer to withdraw a shareholder proposal to force the company's sale in return for a board seat.
Officials at Palfed Inc., parent of Aiken, S.C.-based Palmetto Federal Savings Bank, last week said they won't stray from a plan to stay independent to "satisfy the demands" of Mr. Shearer and his partner, Jerry Zucker.
"The company will not be coerced into ill-advised action to satisfy the greed of a minority shareholder," John Troutman, Palfed's president and chief executive, said in a written statement.
Mr. Troutman could not be reached for comment.
Mr. Shearer and Mr. Zucker, whose Mid-Atlantic Investors owns 9.9% of Palfed's common stock, sent the $659.8 million-asset thrift a shareholder proposal last week that calls for the bank's merger. The investors agreed to withdraw the proposal to the 1997 company proxy statement if Palfed would install M. Jerry Garfinkle, an attorney who works for Mr. Zucker, as a board member and create a mergers and acquisitions committee.
In addition, the pair wants Palfed to hire an investment banker to shop the thrift.
"I think it would be a voice representing shareholders who are not currently represented," Mr. Shearer said of Mr. Garfinkle's nomination.
But Mr. Shearer said he wouldn't comment on Palfed's response to his offer.
"They have their view, we have ours," he said.
Palfed officials said in a statement that they do not think Mr. Garfinkle has the "corporate or community presence" to represent the company in Charleston. Nor could he represent all shareholders as an attorney of Mr. Zucker, a manufacturing executive in Charleston, officials said.
"Jerry Zucker was offered the opportunity to be a candidate for the board and rejected that offer because he 'doesn't have the time,'" the statement said.
Mid-Atlantic Investors, which is based in Columbia, S.C., bought into Palfed last year, shortly after forcing the sale of nearby Bankers First, a $1.1 billion thrift company in Augusta, Ga.
An analyst who follows Palfed stock said the thrift has been rumored to be an acquisition target for months. But she didn't think Mid-Atlantic Investors' actions last week would succeed in selling the bank in the near future.
"Management is fairly committed to remaining independent," said Claire Fleming Newman, a bank analyst at Friedman, Billings, Ramsey in Arlington, Va. "Therefore, I don't think that at least in the shorter term, it will have much impact on getting the bank sold."
Still, Mr. Shearer's actions affected Palfed's stock price last week.
Palfed had been trading in the $13 range, closing at $13.50 on Nov. 11.
But after Mid-Atlantic Investors made public on Nov. 19 its shareholder proposal to force the sale of the bank, the stock price closed at $14.44.
The stock dropped back down to 3.75.