A Virginia thrift company is battling the advances of activist investor Jerry Shearer, whose investment group is trying to put three of its own on the board.
The conflict between Mr. Shearer's group, Mid-Atlantic Investors, and Cenit Bancorp, Norfolk, is expected to come to a head at Cenit's annual meeting April 23. Shareholders will be able to vote on Mid-Atlantic's nominations for three outside directors and the group's request that an investment banker be hired to determine Cenit's worth.
"It's the first step in selling the bank," Mr. Shearer said this week. "Because we believe that selling the bank is the only way to fully maximize shareholder value."
Mid-Atlantic owns 9.7% of the outstanding shares of Cenit Bancorp's stock. The $707 million-asset thrift company, parent of Cenit Bank, operates 18 branches in the Tidewater area near Virginia's coast. Mr. Shearer said he's upset by the thrift's performance-return on equity of 7.56% and return on assets of 0.54% last year. Both numbers are calculated after the special Savings Association Insurance Fund assessment.
Michael S. Ives, Cenit president and chief executive officer, could not be reached for comment. However, in a news release and a letter accompanying the company's proxy statement, Mr. Ives asked shareholders to vote down Mid-Atlantic's proposals.
He questioned the impartiality of directors nominated by Mid-Atlantic and also scoffed at the idea of hiring an investment banker to determine the bank's worth.
"The resolution is crafted to force an immediate sale of the company regardless of whether such a sale is in the best interests of Cenit's shareholders," Mr. Ives wrote. "I wouldn't sell my house or even my car by telling the world the lowest price I'm willing to accept. Why would anyone consider forcing the sale of a public company with assets of more than $700 million that way?"
But Mr. Shearer said it soon could be too late to achieve that goal.
"With each passing day, we feel the bank is missing the window of opportunity to be acquired at a premium to current book," he said.