Activist shareholder Lawrence Seidman has forced the sales of four community thrifts to date, but Vista Bancorp in Phillipsburg, N.J., says it does not intend to become his next coup.
The $692 million-asset company moved to thwart the well-known community bank investor after it learned he wants a seat on its board.
Since 1995 Mr. Seidman has been involved in proxy contests with six companies, four of which - South Jersey Financial Corp. in Turnersville, N.J.; IBS Financial Corp. of Cherry Hill, N.J.; Wayne Bancorp of Wayne, N.J.; and First Federal Savings and Loan Association of East Hartford, Conn. - were eventually sold.
Last month Vista amended its bylaws to exclude from its board anyone who has been censured by state or federal regulators - a move that effectively invalidated Mr. Seidman's candidacy. He was issued a cease-and-desist order by the Office of Thrift Supervision in 1994 after a federal appeals court concluded that he had tried to obstruct an OTS investigation and counseled a witness to withhold information from the agency.
"When we realized that Mr. Seidman was interested in the board seat, we did some research," said Vista president and chief executive Barbara Harding. "Our bylaws were basically changed to make sure people were of the caliber we wanted on the board. And if Mr. Seidman happened to fit into the change we made, so be it."
The company amended its bylaws after Mr. Seidman made it plain in a January meeting with Ms. Harding that he sought a board seat. Mr. Seidman requested that Vista's 10-member board be expanded by one to include him, but the board rejected this in February. He later lost an appeal in state court to reverse Vista's bylaw amendment.
"We asked for one, single seat on the board," Mr. Seidman said. "People should ask themselves why they were afraid to have one significant shareholder on the board."
Mr. Seidman said he is not giving up on Vista; he is leading a dissident group's proxy fight for three Vista board seats.
The group, which owns slightly less than 5% of Vista, aims to persuade shareholders that the company should hire an investment bank to make in-market deals or to explore a sale. In documents filed March 12 with the Securities and Exchange Commission, the group said the company's market value could not be "maximized solely through internal growth."
Though analysts say Vista's return on assets last year of 1.02%, and return on equity of 13.65% were in line with those of its peers, Mr. Seidman said it could do better. He said that if his slate of directors is elected and if a sale of the company is not possible at an adequate price his faction would work to increase earnings, assets, and deposits and to buy back shares.
"Whether the company is an acquirer or seller," it "must become more aggressive in repurchasing its shares," the proxy reads. "If the company cannot grow through accretive acquisitions, the goal to maximize value can be accomplished most effectively by selling or merging the company."
Ms. Harding said Vista expects to get approval for its own proxy statement "any hour now" but in the meantime has sent a letter to shareholders about the opposition slate.
"We have to take all the steps necessary to get as many votes we possibly can," Ms. Harding said in an interview last week. "I don't think anything is a sure thing," she said, "but we're going to do what is necessary to make it a sure thing for our organization."
In a letter to shareholders this month, Ms. Harding warned that the dissident group "wants to force Vista to sell its franchise at a time when market conditions may not be ideal. Furthermore, this group has apparently no regard for maintaining Vista as a community asset."
Vista's stock has risen amid the turmoil. It is up 10% since Mr. Seidman's January meeting with Ms. Harding and was trading at $20.50 a share at midday Monday. It set a 52-week high of $22.50 on March 19.