US bank investor activism reaches highest level in the past 5 years

With more than six months remaining in 2024, investor activism at US banks is at its highest level in the last five years.

So far in 2024, 45 activist investor campaigns have targeted US banks, more than any other year dating back to 2019. The total includes 33 unsuccessful campaigns, one successful, one settled, one withdrawn and nine still active as of June 4. The next closest year, 2023, had 39 activist investor campaigns.

Among 207 activist campaigns since 2019, 152 have been unsuccessful, 15 have been successful, 15 have been withdrawn, 13 have been settled and 12 were still active as of June 4.

Active activists

Since 2019, Kenneth Steiner has launched the most campaigns of any activist investor, with 21 unsuccessful, five successful and one still active as of June 4.

Steiner has launched five campaigns in 2024, targeting Truist Financial Corp., Bank of America Corp., Citigroup Inc., New York Community Bancorp Inc. and Valley National Bancorp. As of June 4, four of those five were unsuccessful. The fifth campaign, calling for New York Community Bancorp to establish simple majority voting, failed at the company's June 5 annual meeting.

Among the other top activists since 2019, John Chevedden, Stilwell Value LLC and Harrington Investments Inc. are actively involved in campaigns this year.

Stilwell, which has been the fifth-most active activist investor since 2019, submitted a stockholder proposal at IF Bancorp Inc. in May calling for the company to sell. The proposal described IF Bancorp's earnings as "subpar" and suggested a sale would best serve shareholders.

Stilwell also waged the only successful shareholder activism campaign this year with the threat of a proxy fight or contest. Stilwell's nominee, Corissa Porcelli, was elected to Sound Financial Bancorp Inc.'s board in May, after the bank recommended her nomination in its proxy statement.

Shareholder proposals are by far the most common tactic employed in activist investor campaigns, totaling 161 since 2019. Nonconfrontational communication and engagement was the second-most common tactic, at 32, followed by proxy fight or contest at 31.

What's the objective?

The most popular activist objective at US banks since 2019 has been to replace or nominate some or all directors, which was an objective of 33 campaigns. However, only four of the 45 activist campaigns launched this year have had the objective of replacing or nominating some or all directors.

Of those four, two are still ongoing, including Stilwell's campaign at IF Bancorp and a campaign by Dream Chasers Capital Group LLC against Carver Bancorp Inc.

Dream Chasers has launched multiple hostile takeover attempts at Carver since 2023, offering to purchase a 35% stake in the company amid its underperformance relative to peers. Carver rejected Dream Chasers' most recent offer in January, casting doubt on Dream Chasers' ability to gain regulatory approval due what the company described as an "adverse" regulatory history.

Policy diversity and opportunity was the second-most popular objective, in 30 campaigns, while amending bylaws of issuer was the third-most popular in 24. Fourteen of the campaigns launched this year have had the objective of improving policy diversity and opportunity. The most recent such campaign was Inspire Investing LLC targeting Western Alliance Bancorp. in April.

Pressure to sell the company, tied for the fifth-most popular objective since 2019, has been an objective of several campaigns recently.

BankFinancial Corp. has faced pressure to sell from shareholders since at least February, when investors made the request directly to executives on the company's fourth-quarter 2023 earnings presentation. The subject came up again in May, when Henryk Walczak, a beneficial owner of 133,480 BankFinancial common shares, demanded the company "promptly" take steps to merge or sell.

"I think it unlikely BankFinancial stockholders will receive an acceptable return on their investment in the foreseeable future through the Company's continued independent operation," Walczak wrote in the proposal.

Additionally, Blue Foundry Bancorp recently voted down a proposal by investor Lawrence Seidman that the bank hire an investment banker to facilitate a sale during the company's annual shareholder meeting in May, according to a company filing.