A shareholder of Washington, N.C.-based First South Bancorp Inc. has put forward a proposal calling for the sale of the company.
In a June 2 proxy filing, Phillip Lewis — who owns 138,149 common shares — argued that the company and unit First South Bank "have suffered a long run of financial under performance," citing metrics such as return on average assets, return on equity, efficiency ratio, dividends, loan loss reserves and net loan assets.
Lewis also took issue with the compensation of the company's directors, which he claims is "significantly" more than director compensation at peer banks.
For its part, the First South Bancorp board recommended a vote against the proposal, reasoning that a sale does not maximize shareholder value. The board also said that the company has made significant progress in its financial performance and has "great momentum" going forward. In addition, the board also noted that First South has fewer outside directors than most community bank peers, which means that directors have more responsibilities compared to members of a larger board, leading to a higher per-director compensation level.
The filing also indicated that President and CEO Bruce Elder met with Lewis several times in an attempt to address the latter's concerns. The meetings did not result in a satisfactory resolution.
The annual shareholder meeting is scheduled for June 29.