You might call it a shotgun courtship, and certainly not the type of news that bodes well for a long-term investment. Apparently, New Jersey savings and loan lBS Financial Corp. (Nasdaq: IBSF) has yet to find the right suitor–at a time when the banking industry is on a merger spree. But IBS’s lonesome condition isn’t for a lack of effort on the part of a major shareholder, Lawrence B. Seidman, who currently holds a 7.7% stake in the company.
Ryan, Beck & Co. account executive Curt Easton, who recommended the stock in last February’s Stockpile column, says that Seidman hopes to push lBS to find another financial institution interested in a takeover bid. According to Easton, Seidman has let it be known that he has his eye on two seats on the savings & loan’s board.
In turn, IBS has responded to a possible shareholder fight with a couple of bouquets. The firm announced a special one-time 10% stock dividend early in 1996, and moved to raise its dividend to 24 cents a share.
Still, waiting to see what effect dissident shareholders may have on IBS’s corporate culture might not carry the highest of payouts. When the Federal Reserve raised interest rates last year and speculation buzzing about on Wall Street pointed to more intervention in the near future, many financial stocks found the going a bit rough through much of 1996.
IBS was socked as hard as most other financial stocks. Its earnings fell 20% for the first nine months of fiscal 1996. While lBS management didn’t return calls, the upshot of a bumpy year is that the S&L’s stock trades at the same $16 price as when we wrote about it a year ago. The environment in 1997, as of this writing, remains unclear as the investment community mulls over the Clinton Administration’s encore performance and attempts to gauge how much more stamina the bull market has. From a shareholder’s perspective, uncertain fundamentals and a feisty outside investor-hounding management don’t add up to a promising year. “I’ve recommended investors sell out,” says Easton. “Unless the bank gets sold, there’s really no reason for investors to stay in.”
IBS FINANCIAL CORP. (Nasdaq: IBSF)
Current price: $16.00
* Price at recommendation: $16.00
52-week high/low: $16.38/$12.50 Earnings per share:$0.43
P/E ratio: 37.0
*AS OF 11/18/96