Old news, but I just found it on the Yahoo board:
INVESTORS TURN UP THE HEAT FOR ST. PAUL BANCORP TO SELL
By Melissa Wahl
Tribune Staff Writer
August 2, 1998
Some investors of St. Paul Bancorp Inc. are pressuring the Chicago thrift to sell, saying the company has no clear plan for
improving its slow earnings growth.
Analysts and at least one key investor have gotten more vocal about their concerns over the last three quarters, and they
became especially irritated during a recent conference call with St. Paul executives discussing the thrift's second-quarter
earnings.
Profits edged up just 1 percent, to $12.5 million, and earnings per diluted share remained flat at 36 cents in the quarter.
St. Paul's return on equity--a measure of how well shareholders' money is being employed--is relatively low, 11.5 percent.
When analysts complained about it, Chairman and Chief Executive Joseph Scully apparently suggested that if St. Paul's equity
were lower, the ratio would be better.
"Once he said that, everybody got on him," said Joseph Stieven, an analyst with Stifel, Nicolaus & Co. in St. Louis.
"Investors are saying, If you can't give us at least average results, you should sell this company," he said.
St. Paul's 1.07 percent return on assets is just above the industry benchmark of 1 percent, but many banks and thrifts have
performed better than that in recent years. It spends 64 cents for every dollar of revenue, which is high for a thrift, and St.
Paul has been drawing on its loan loss reserves to boost earnings.
Stieven says he has not given up on St. Paul yet.
"I'm still open to hearing the company demonstrate a clear plan for getting there," he said.
Harry Keefe, St. Paul's third-largest shareholder, with 3 percent of its shares, said he plans to take unspecified "forceful
action" if executives fail to present a viable plan for improving performance.
"This is an inherently good franchise, but not being managed as it is now. Whether that means a merger or a different kind of
management with a different style, only time will tell," Keefe said.
He noted that St. Paul has two new competitors in metropolitan Chicago--Bank One, which is acquiring First Chicago NBD
Corp., and NationsBank, which is acquiring BankAmerica Corp. "St. Paul says it's competed against other Chicago banks for
years, but these new competitors are different from what they've seen before. These are major retail banks," Keefe said.
Robert Williams, a spokesman for St. Paul, declined to discuss the recent conference call and to comment on whether the
company feels increasing pressure from analysts.
In a written comment, the company pointed to its stock performance, which has averaged an annual return of almost 20
percent during the 11 years St. Paul has been publicly traded. That beats the return of Standard & Poor's 500-stock index
and Standard & Poor's small-cap savings-and-loan index over the same period.
But in the last three years, St. Paul has returned a total of 81.7 percent, well below the 108.3 percent of its peers in the
small-cap thrift index.
St. Paul also points to its strong balance sheet, saying its conservative philosophy has been rewarded as other thrifts failed.
It also expects the recent acquisitions of Serve Corps Mortgage and Beverly Bancorp. to improve returns.
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