UPDATE: Harvard Savings Bank, Harvard, IL (HARI)

Oh, what a blow Duffield J. Seyller III has dealt to America's trust in Community Banking. It's been over a year since my initial review of Harvard Savings Bank, child of Harvard Illinois Bancorp, and I'm sorry to say, in that time, the condition of the institutions has gone from bruised to battered.

To his list of reckless behaviors, Seyller has added an almost unbelievably rash investment debacle that put over $18M at risk and plummeted HARI stock 60% since last April's annual shareholder meeting. What will it take for this guy to let Harvard go to someone who knows how to treat a bank, its owners, and the public trust right?

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Disclosure: As of this posting, I own shares of HARI and may subsequently either dispose of them or purchase more.

Prospective Buyers	First Midwest Bancorp, Itasca, IL (FMBI) Standard Bancshares, Hickory Hills, IL (private) Wintrust Financial, Rosemont, IL (WTFC)
Financial Snapshot (as of 06/30/2014)	PLEASE NOTE: While the numbers here reflect Harvard's most recently reported financial condition, they do not account for significant losses associated with the bank's misguided investment activities. Total assets: $171M Tangible book value per share: $24.77 NPAs to assets: 2.4% Price to book: 29.1% Market cap: $6M Dividend yield: 0% Trailing 12-month return on assets: 0.4% Trailing 12-month return on equity: 3.6% TARP: $0
Scoundrels	Same three characters as a year ago, but oddly, each in a different role. Duffield J. Seyller III, Chairman Donn L. Claussen, President and CEO William D. Schack, Vice Chairman of the Board
Red Flags	Maybe I've been too hard on Duffield J. Seyller III. He is not without his talents. I'm just not sure they're of the sort most folks would find consistent with good old-fashioned Midwestern American Community Banking values. Duffy is a pretty skilled pick pocket! Don't let his pretentious anti-shareholder rhetoric fool you: this stealthy guy grew his own wealth by some $1.2M in compensation over the past five years — a whopping 80% of the company's entire reported earnings — while leaving a mere $260K or so for the institution and its shareholders. Duffy can pick a fight as well as a pocket! In fact, it's looking like we can count on him to fight even the most senseless of battles "to the bitter end," even if it means taking an 80 year old institution down with him. Duffy's already blown some $800K of the bank's assets just to deny Harvard's largest shareholder the right to representation on the Board and a say in how the institution and its funds are managed. Duffy's fight has brought the bank to the brink of death. Duffy isn't afraid to bet the bank! He can't be accused of any average, conservative small town banker mindset, that's for sure. Duffy risked $18M — (14% of the deposits the community entrusted to the bank and 88% of the bank's entire shareholder equity!) — in a pool of what turned out to be non-existent-even, way-out-of-state securities promising too-good-to-be-true yields of prime plus 150%. And since Harvard's deposit base wasn't big enough to cover it, Duffy made an even bigger gamble, borrowing $8.9M from the Federal Home Loan Bank to help fund the "investment."   Duffy is one proud man! He'd rather see the bank die than let it go in a sale to new owners who'd treat it more tenderly. And Heaven Forbid, he let his most concerned shareholder-owner come in close enough to help the poor battered institution heal and avoid further life-threatening injury. Or maybe Duffy simply missed that day in Sunday School when the rest of us learned that Pride Cometh Before the Fall (Proverbs 16:18).
Sources	Harvard Savings Bank website May 2014 10-Q Crain's Chicago Business Article SNL Financial Confidential interviews with shareholders