An investor group is attempting to inspire a shareholder revolt to detail a merger between two South Carolina thrifts.

Columbia, S.C.-based Mid-Atlantic Investors says it will "actively oppose" the deal between United Financial Corp. of South Carolina and American Federal Bank of Greenville. Mid-Atlantic is attempting to force United to find another merger partner.

The investor group owns 28i000 shares, or 9.9%, of United, a thrift holding company based in Greenwood.

Mid-Atlantic managing partner Jerry Shearer sent United Financial shareholders a letter urging them to join him in a vote against the deal, due to a "lack of fairness" in the exchange ratio.

United Financial, which has $717 million of assets, and American Federal, with $1.2 billion, said in April they planned to combine into a new entity known as Atlantic Bancorp, which would be the largest independently owned financial institution in South Carolina.

The transaction would be a merger of equals, with no premium paid to either side.

Mr. Shearer, who declined further comment Tuesday, said in his letter that the proposed transaction did not adequately compensate United shareholders for their loss of voting control in Atlantic Bancorp.

He also claimed United would suffer a loss of book value. In an accompanying news release, Mr. Shearer said Mid-Atlantic wanted United to "seek proposals from others with the goal of obtaining the highest premium possible from a bank with quality stock."

Disappointment at United

United executives released their own statement Tuesday saying they were "disappointed" with the actions taken by Mid-Atlantic and expressing confidence that the proposed merger with American Federal would "reward our shareholders."

Mid-Atlantic's opposition to the merger had been expected. Mr. Shearer and his partner, Jerry Zucker, have a history of taking big positions in thrifts and then encouraging those companies to sell out, usually to commercial banks.

They did it with South Carolina Federal Corp., which sold out to First Union Corp. in 1992. And they did it again last year with First Savings Bank of Greenville, which accepted a buyout offer from Southern National Corp.

Mid-Atlantic also has a 9.9% stake in Bankers First Corp. of Augusta, Ga.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.