Activist U.S. banks investor Driver Management Co. LLC is renewing its call for Oakland, Md.-based First United Corp. to sell itself.
In a letter to First United Chairman, President and CEO Carissa Rodeheaver, Driver Management Managing Member Abbott Cooper said the bank's shares have consistently traded at an average price-to-tangible book multiple discount of 35% compared with its peers in the SNL U.S. Bank $1B-$5B Index and that the stock has traded at a discount to tangible book value 70% of the time during the last 10 years.
Cooper also argued the bank's loan growth is less than half of its regional and national peers over the past five years and its noninterest expenses are more than 25% higher compared with national peers. He also pointed out that the average director tenure is more than 15 years, and that eight of the 12 board directors have overseen "sustained underperformance for over a decade."
If ever First United decides to be a stand-alone company, it would need to increase its return on average assets and total assets by more than 70% to match the same value a sale would provide, Driver Management wrote in the letter.
The activist investor argued First United could be valued between $26 and $33 per share in a sale. Based on its outstanding shares as of July 31 and the upper end of the range, S&P Global Market Intelligence calculates the deal value could reach to as high as $234.5 million.
Driver Management called on the company to hire an investment bank to start the sale process and establish a special committee to oversee the investment bank's efforts and to review strategic alternatives. It also called on First United to provide an outlook and periodic updates to shareholders during the sale process.
The investor has previously lobbied First United shareholders to demand that the company hire financial advisers to run a sale process, arguing that the company would be "worth significantly more" in a sale than as a stand-alone entity.
Rodeheaver told S&P Global Market Intelligence that the board and management are currently reviewing the letter and that they had no comment at this time.
