A planned merger of two Bayonne banks was derailed, at least temporarily, after a stockholder in one bank filed a lawsuit to delay the vote, citing a lack of public information about possible conflicts of interest.
William J. Campbell, Pamrapo’s largest shareholder and its former chief executive, sought and received an injunction from Superior Court to delay the vote until Feb. 11, at which time full disclosure can be made of stock holdings among some of the board members involved.
However, the management at Pamrapo Bank said the court had simply provided more time for Campbell to give the public more information.
“This will give him an opportunity to get his report out,” said a board member of Pamrapo Bank. “The court did not rule on the conduct of the boards.”
“Board members were not required to disclose stock share ownership. But the information is public, so be it. The SEC does not require disclosure.” – Spokesperson for Pamrapo Bank
The stock-holdings of board members are not an issue, Pamrapo management said.
“Board members were not required to disclose stock share ownership,” management said. “But the information is public, so be it. The SEC does not require disclosure. It means nothing. This only delays the vote. The merger is good for shareholders, the city and both banks. It gives Bayonne one bank that has assets of $1 billion instead of two banks with $500 million.”
The merger reduces the costs to the bank in two particular areas, regulatory issues and accounting.
“Those are big expenses, and this merger cuts those costs in half,” management said. “As a result of the merger, Bayonne comes out of this with a stronger bank.”
Management said there will be no layoffs as a result of the merger, and that staff will be downsized through attrition.
“The shareholders will be the primary beneficiaries because the cost of operating the banks will be reduced,” the official said.
Several other shareholders said the merger is good and that the inner financial workings of both banks would be closely examined, allowing the new bank to remain strong and viable in a challenging economy.
Campbell, in his statement, said the delay in the vote “gives the shareholders time to study this issue and vote with their eyes open.”
He said one issue he had with the vote was the amendment to the merger agreement that changed the requirement for approval. Instead of requiring a majority of voting shares to approve the transaction, only a majority of the total votes cast is needed, he said.
Campbell said Pamrapo’s board failed to get the best deal for shareholders when they agreed to exchange one share of Pamrapo for one share of BCB. He said he believes Pamrapo could outperform BCB if they don’t merge.