One Way to Wage a Proxy Fight

“Below is a picture taken at last year’s annual shareholder meeting of our bank’s chairman,” the two-sentence shareholder letter from the activist investor Joseph Stilwell began. “None of the other board members bothered to wake him up.”

The letter describes a photo of William Schack, then chairman of Harvard Illinois Bancorp, who looks as if he is fast asleep below the words “Winning with teamwork,” which appear to be written on the wall above him.

If nothing else, the photo proves that Mr. Stilwell knows how to get attention for a proxy battle.

The head of the hedge fund Stilwell Value Partners, Mr. Stilwell has been pushing for Harvard to merge with another community bank and wants Mark Saladin, a partner at the law firm Zanck, Coen, Wright & Saladin, elected to the board.

“If you, like me, believe it’s time to bring a fresh influence to our bank’s board of directors, please vote the GREEN proxy card for Mark Saladin,” Mr. Stilwell wrote in his letter, filed on Tuesday with the Securities and Exchange Commission.

Sleeping during a meeting is not the only infraction that Mr. Stilwell is upset about.

In a letter to shareholders last month, the investor took issue with the fact that the chief executive’s pay was greater than the bank’s earnings “in a majority of years for which information has been publicly reported.”

“The bank has delivered subpar returns for a number of years,” Mr. Stilwell said in an interview on Thursday. “We’ve seen no indication they’re going to ever deliver anything but subpar returns and that tells us as investors that the bank would do better being merged with a stronger, better-run community bank.”

A representative for Harvard could not immediately be reached for comment.

Harvard has about $170 million in assets, according to its most recent annual report. That was roughly flat from the previous year, while total interest and dividend income decreased more than 10 percent.

But the bank is celebrating the fact that it has gotten out from under the thumb of regulators, with whom it ran afoul in the wake of the financial crisis. In a filing on April 4, the bank disclosed that it had improved its financial condition enough to terminate a memorandum of understanding with the Federal Reserve Board. The enforcement action, issued in 2010, prohibited the bank from paying dividends and repurchasing common stock and required other compliance measures amid concerns over the company’s capital and risk-management plan.

Stilwell, which owns nearly 10 percent of Harvard, has made a strategy out of focusing on small community banks. The firm, which does not have a website, manages about $200 million and has a significant investment in 35 community banks, according to a spokeswoman.