First South Bancorp survived a close vote on a shareholder proposal to "immediately" take steps to sell the Washington, N.C., company.

The $940 million-asset First South disclosed in a regulatory filing that about 45% of voting shares supported the proposal by Phillip Lewis, an investor who owns about 2% of the company's stock. Lewis had argued that the company was underperforming peers and has been paying a dividend that was much smaller than what it paid before the financial crisis.

Lewis was also upset with the performance of nine branches First South bought from Bank of America in 2014. He had also raised an issue with the board, noting, among other things, that the company's independent directors had an average age of 73.

First South successfully argued that adopting the resolution would be "inconsistent" with the goal of increasing long-term shareholder value. "Adoption could create uncertainty with respect to the company's future, which could undermine the company's relationships with its customers, employees and the communities that it serves," First South argued in a proxy statement.

"This uncertainty could have unintended consequences and adversely impact the company's ability to operate effectively, which may result in a decline in revenues due to the loss of high-quality employees and the customers they serve," the proxy added. "These consequences could result in erosion of the company's value."

First South, meanwhile, took one step that could reduce the average age of its directors, changing its bylaws to lower the mandatory retirement age to 80 from 85. At the same time, two directors retired last week after reaching the new mandatory retirement age.

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