HopFed Bancorp (HFBC) in Hopkinsville, Ky., has drawn the ire of activist investor Joseph Stilwell over its recent agreement to buy another bank.
Stilwell is asking HopFed's shareholders to support his nominee for the company's board. Stilwell is upset with HopFed's decision to pay $14.3 million, or an 11% premium over tangible book value, for the $184 million-asset Sumner Bank & Trust.
Stilwell said in a recent regulatory filing that HopFed should have used its capital to repuchase stock instead of buying the Gallatin, Tenn., bank.
Adding Robert Bolton, president of Iron Bay Capital, to the board would "send a message to management and the board that they should be held accountable to shareholders," Stilwell wrote in a Wednesday letter to HopFed's shareholders that was included in the filing. The vote is scheduled to take place at HopFed's May 15 annual meeting.
Funds controlled by Stilwell have a 7.6% stake in HopFed. The company is the parent of Heritage Bank, a former mutual thrift with $965 million in assets. Federal regulators terminated two enforcement orders against HopFed last fall that had limited the company's dealings in commercial real estate.
Stilwell waged a proxy battle against First Financial Northwest (FFNW) last year that evolved into a legal fight when the parties disagreed about the results of the Renton, Wash., company's annual meeting. Stilwell and First Financial eventually reached a settlement, and a Stilwell-backed candidate joined the company's board last month.