As the head of a low-profile investment firm in Wilkes-Barre, Pa., Michael H. Cook seems an unlikely shareholder activist.
But Mr. Cook, president of Berkshire Asset Management and a major investor in thrift institutions, telegraphed a blunt wake-up call to a banking company in which he has a large stake.
He wants Onbancorp of Syracuse to be sold.
Mr. Cook is backing a shareholder resolution urging the company to put itself on the block. He has hired both a proxy solicitation firm and a law firm to press the effort.
Since submitting the proposal several weeks ago, he said he has received calls of support from "several dozen" of the bank's shareholders.
Onbancorp has been "undermanaged" and its directors "have not recognized their duties to the owners of the business," Mr. Cook said in a recent interview. "We're going to be more vocal and see what other shareholders think."
Onbancorp is a former thrift that converted to a bank charter in 1989. It has assets of $6.7 billion and offices across upstate New York and Pennsylvania
Following several high-flying years, Onbancorp endured a loss in 1994 after rising interest rates and accounting changes submerged portions of its investment portfolio.
The company's fortunes have improved this year and its stock price is up over 40%, but much of that gain amounts to regaining ground lost last year. Last week it traded near $33.
Mr. Cook's owns 3.2% of Onbancorp for his clients. A portion, 12,375 shares, is in the portfolio of Berkshire Partnership, an investment fund he founded in December 1989 to focus on the savings industry.
The fund, now $8.5 million in size, has tallied a net return of 42.44% this year through Sept. 30. Over the last three years, the fund is up 95.7% in value, after fees, for a compound annual growth rate of 25.1%.
Mr. Cook said Berkshire Partnership was started to take advantage of "the doom and gloom" that then inundated thrift stocks and to profit from opportunities in mutual savings institutions converting to stock ownership.
The fund initially targeted thrifts between $500 million and $5 billion in assets. Deposits were placed in several dozen attractive institutions that appeared to be strong candidates for stock conversion.
More recently, Berkshire Partnership has also branched into bank stocks.
By design, the fund is made up of just 10 stocks, so that Mr. Cook's firm can closely monitor company performance. There is also litle turnover in the fund.
"Our investment philosophy is to be the long-term owners of companies with good long-term prospects," he said. "Our plan is to stick with companies that we think have the right management in place and who will manage for greater shareholder value."
Onbancorp entered the picture in August 1983 when it bought one of the thrifts in the Berkshire Partnership portfolio, Franklin First Financial Corp. of Wilkes-Barre. Mr. Cook was a director of Franklin First at the time.
Asked why he has not sold his Onbancorp stake, Mr. Cook said he believes "the inherent value of the company is dramatically higher than the current stock price."
"They have a decent franchise," he said. "But they need to realize that they are not providing a good return to their shareholders, that other institutions would like to own them, and that their shareholders would be rewarded if that happened."
Robert J. Berger, Onbancorp's chief financial officer, said Mr. Cook's shareholder proposal had been recieved by the company, but he declined further comment.
Berkshire Partnership's largest current holding is N.S. Bancorp, Chicago, a thrift company. That investment, which dates from N.S. Bancorp.'s 1990 conversion, comprises 21.5% of the portfolio.
Strong expense control and aggressive share repurchases by the thrift have impressed Mr. Cook, who owns about 6% of N.S. Bancorp. in the aggregate.
"They went public with 10 million shares and have reduced that to six million shares outstanding," he said. "And on average they have bought back those shares at a low price-to-earnings (ratio) and at a discount to book value."
Berkshire Partnership's second-largest holding, at 20% of the portfolio, is New Jersey's First Fidelity Bancorp, which is scheduled to be acquired by First Union Corp.
"We bought First Fidelity two years ago because we did not think the market was recognizing the job management was doing," he said.
Mr. Cook bought in at $42 per share. The stock now trades above $73. The money manager also said he would probably keep First Union's stock after the merger is completed.
The third largest holding is Home Financial Corp., Hollywood, Fla. Mr. Cook bought 100,000 shares at $10 a share in the thrift company's public offering last year. It now trades at $15.
The other stocks in the portfolio are Bankers Corp., Perth Amboy, N.J.; Charter One Bank, Cleveland Circle Financial Corp., Sharonville, Ohio; First Bell Bancorp, Pitttsburgh; Interboro Savings Bank, Cherry Hill, N.J., and Northwest Savings Bank, Warren, Pa.
Recently, Berkshire Partnership's stake in the 10 companies had a market value of $7,683,000, versus a cost basis of $3,983,000.
"The attractiveness of this industry isn't what it was three years or certainly five years ago," Mr. Cook said. "It is much more difficult to find the kind of companies we want to buy into at reasonable price levels. The opportunities are increasingly rare."
Mr. Cook, 38, founded Berkshire Asset Management in 1986 after a tour of duty at Merrill Lynch & Co. The firm manages about $250 million for high- net-worth individuals and a variety of institutional clients.