Nathan G. Danziger has owned stock in Croghan Bancshares Inc. of Fremont, Ohio, since 1948.
He is a customer, too. Croghan Colonial Bank, the $387 million-asset company's only subsidiary, holds a mortgage on one of the three apartment houses he and his brother Samuel, who is also a shareholder, own in Fremont.
Despite those ties, the brothers and Samuel's son, Jared, have emerged as Croghan's loudest critics.
Nathan has sought a seat on its board for three years running, and all three of them have pursued a legal battle over access to the bank's books all the way to the Ohio Supreme Court.
But unlike most shareholder activists, the Danzigers are not wealthy investors - their combined stake is just under 1% of Croghan's outstanding stock.
Nevertheless, observers credit them with helping to bring about significant changes, including the replacement of two septuagenarian directors and the decision to increase the quarterly dividend, which has risen by 12 cents since the end of 1998. Moreover, their lawsuit, if successful, could embolden other small shareholders to challenge management.
"We've got an emotional attachment to this investment," Jared said. "It's part of our identity as people who came out of Fremont."
The legal challenge began when the Danzigers, frustrated with the holding company's lackluster performance and languishing stock price, asked to examine Croghan Colonial's books. The bank refused, arguing that the family owns stock in the holding company, not the bank, and thus had no rights to see its records.
Nathan labeled Croghan's argument a ruse, calling the holding company and the bank "Siamese twins." A suit was filed in 1999, and though two lower courts have ruled that Croghan is not obligated to open its books, the state supreme court agreed this month to hear the case. Oral arguments are scheduled to begin in January.
Richard Garabedian, an attorney with the Washington office of Jenkins & Gilchrist, said a Danziger victory could make it easier for other shareholder activists to examine sensitive bank records. Right now that is an option only if they hold a seat on the board of directors.
He acknowledged that the Danzigers, who are representing themselves, face an uphill battle, but he added that it was notable that the supreme court - which rejects about 90% of requests - agreed to hear the case at all.
"It's very intriguing that the court took their case," Mr. Garabedian said. "Somebody obviously got tickled by their brief."
Nathan is also seeking a seat on Croghan's board. He lost two earlier bids, and another defeat appears likely this year, given his limited budget for communicating with shareholders. He said he expects to spend $750 on mailings to shareholders, against Croghan's $13,000.
According to Jared, a "closed circle" of Fremont residents who have failed to keep up with the changes in the banking industry control the company. Croghan remains the No. 1 bank in Sandusky County, but its deposit share has slipped from 41% on June 30, 1998, to 37% on June 30, 2000, according to the Federal Deposit Insurance Corp. Meanwhile, its stock price has been flat for years.
Allan E. Mehlow, Croghan's chief financial officer, said its performance is in line with that of its competitors. He noted that it reported record earnings of $5.1 million last year, 39% more than in 2001.
"Our financial performance speaks for itself," Mr. Mehlow said. "A group of shareholders thinks it isn't what it's supposed to be, but this is America, and everybody has a right to their opinion."
Richard Osborne, a Mentor, Ohio, investor who owns 45,000 shares of Croghan stock, said its chief executive officer, Steven C. Futrell, has done a good job since taking over in April 2001.
Still, Mr. Osborne credits the Danziger family with initiating the change and said he plans to vote for Nathan at the annual meeting in May. "They made the company do what it's doing today."
