Stock is targeted to force sellout

Disgruntled investors enlarge stake to 5.4% to pressure Provident

Banking

February 15, 2000|By Bill Atkinson | Bill Atkinson,SUN STAFF

Ten months after they lost their bid to force Provident Bankshares Corp.'s management to sell out, two disgruntled investors and their company have nearly doubled their stake in the bank.

Investors Jerry Shearer and Jerry Zucker and their firm, Columbia, S.C.-based Mid-Atlantic Investors, bought 641,000 shares of Provident stock from Jan. 26 to Feb. 11, according to a filing yesterday with the Securities and Exchange Commission.

They have spent $29.3 million buying Provident stock, accumulating 1,370,238 shares, or 5.4 percent of the company, up from 3 percent last April.

Their mission is the same as it was 10 months ago -- to persuade shareholders to vote with them and force management to sell the $5.1 billion-asset bank company.

"In our opinion their earnings are not what they could be," Shearer said in an interview yesterday.

Neither is Provident's stock, he said. The stock fell to $13.875 yesterday, down 50 cents. The stock has sunk 39 percent year-to-date and is down 57 percent since reaching a high of $32.656 on March 20, 1998.

"I think shareholders ought to be really upset about that," said Shearer, who noted that four years ago the stock traded in the $13 range. "This puts them back to where they were four years ago."

But Peter M. Martin, Provident's chairman and chief executive, said earnings are improving, and most banks have suffered from declining stock prices.

"Our position hasn't changed," Martin said. "Directors and management are not in favor of that proposal" to sell the company. "We think the `for sale' sign isn't healthy."

Martin, however, noted that the company has a "fiduciary responsibility," and that it would take legitimate offers to the board of directors for a vote.

Shearer's investment company has triggered the sale of a handful of banks in South Carolina.

He thinks his chances of forcing a sale are better this year. Last year, his case wasn't spelled out in Provident's proxy statement, but this year it will be, he said.

"It will be an unambiguous up front yes or no vote," he said.

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