Activist investor Joseph Stilwell is not winning much outside support in his bid to force changes at First Financial Northwest (FFNW) in Renton, Wash.
On Wednesday, First Financial announced that a second proxy advisory firm, Glass, Lewis & Company, has recommended that shareholders vote in favor of the company's board nominees at its annual meeting next week and reject the nominee supported by Stilwell.
In its recommendation, Glass, Lewis said that the company's loan troubles in recent years were more a function of the weak economy than poor management and that, under its Chairman, President and Chief Executive Victor Karpiak, the $1.1 billion-asset First Financial has taken "reasonable steps" to shrink its balance sheet and reduce its exposure to problem loans.
Further, Glass, Lewis said that Stilwell is only interested in forcing the company's sale for his own gain and otherwise has not provided a specific plan to "improve shareholder value that the company has not already addressed."
The advisory firm Institutional Shareholder Services reached similar conclusions in its recommendation Monday that its clients vote for management's slate.
A well-known investor in community banks, Stilwell began acquiring First Financial shares last summer and now owns an 8.5% stake in the company. In a letter last month stating his intention to nominate Spencer Schneider to the board, Stilwell blasted directors for refusing to consider a sale of the company and for agreeing to nearly double Karpiak's pay since 2007, to $1 million, despite massive losses and a plummeting stock price.
In a news release, Karpiak said he was pleased that Glass, Lewis recommended that shareholders vote against Stilwell's nominee. "We believe that this recommendation, along with the recommendation from Institutional Shareholder Services…reflects the substantial improvements we have made in our performance and affirms that we are on the right course," he said.
First Financial's shares were trading at $7.70 late Wednesday, down 2.4% from Tuesday's closing price. Year-to-date, however, the stock is up 31%.