Activist investor presses First United in Maryland to sell
An activist investor is pushing First United in Oakland, Md., to sell itself.
Driver Management, which owns about 5% of the $1.4 billion-asset First United's stock, suggested in a letter to the company that it could sell for $26 to $33 a share.
In a Sept. 4 letter addressed to Carissa Rodeheaver, First United's chairman, president and CEO, Abbott Cooper, Driver's managing member, expressed concern that the company's shares have traded at a discount to tangible book value more than 70% of the time over the past decade. Cooper noted that First United had achieved less than half the loan growth of its regional and national peers over the past five years.
"It seems obvious to us that the First United board ... has completely and resolutely failed to deliver acceptable results to shareholders," Cooper wrote. "The only way for the First United board to finally create value for its long-suffering shareholders is to immediately hire experienced and qualified financial advisors and start a sale process."
Cooper said the bank would need to increase its return on average assets by more than 70% — from about 0.73% to 1.5% — at current loan growth rates to achieve the same value that could be obtained from a sale.
The company said in a Thursday regulatory filing that it was "disappointed" Driver launched a "distracting and costly" public campaign in an attempt to force a sale. "First United’s board is committed to building long-term shareholder value and acting in the best interest of all First United shareholders," the filing said.