Management of South Carolina's third-largest thrift faced an uphill battle Tuesday as shareholders gathered to decide the future of the company.
Shareholders of Palfed Inc., Aiken, voted on a dissident proposal for a nonbinding resolution calling on the board to seek acquirers for the $663 million-asset company.
Palfed's management has been trying to ward off Mid-Atlantic Investors, a Columbia, S.C., investors group that has challenged thrift managements across the Southeast. Mid-Atlantic controls 9.9% of Palfed.
Palfed officials Tuesday said the final tally would not be available until early next week. Many shareholders changed their votes "four, five, or even six times before the final vote was taken," said Howard Hickey, Palfed's general counsel and inspector of elections.
Mid-Atlantic managing partner H. Jerry Shearer said that his proxy solicitor's pre-meeting survey indicated shareholders would side with him. Mr. Hickey would not make a prediction on the fate of the dissident proposal. In a separate vote, he said, management's unopposed slate of directors was supported by more than 80% of the thrift's shares.
The Palfed fight is just one in a series of management-shareholder spats at thrifts up and down the East Coast in the last two years.
Mid-Atlantic got a boost in its fight against Palfed management when another major investor threw support its way.
John Hancock Advisors of Boston, which owns 8% of Palfed's outstanding common stock, said Friday it would vote in favor of selling the thrift. Palfed, the parent of Palmetto Federal Savings Bank, has been under attack by Mid-Atlantic for lackluster earnings performance in recent years. The thrift hasn't broken 0.6% return on assets since 1992.
Hancock officials could not be reached for comment, but portfolio manager James Schmidt told Bloomberg Business News that "I doubt (Palfed's) strategy for growth will provide more to shareholder interests than seeing what banks might have interest in an acquisition."
"I'm quite pleased that the large sophisticated shareholder has done an independent evaluation and has reached similar conclusions that we had reached," Mr. Shearer said.
Palfed president John C. Troutman said he was disappointed by Hancock's plans to vote against management.
Before Tuesday's vote, Mr. Troutman had said he doubted whether Hancock's actions would have an impact on the final tally.
"I think all the voting is done at this point," he said Monday. "They voted at the 11th hour. Most shareholders have already made their decision."
He also said that the resolution to sell the bank was nonbinding and that the board would act in the best interest of shareholders regardless of the vote's outcome.
A recent independent report by Institutional Shareholder Services, a Bethesda, Md., advisory group, sided with management's view that the thrift should be allowed to grow. The report recommended that shareholders vote against Mid-Atlantic's proposal.